Volume 2, Number 2


Monetary policy transmission in Namibia: The credit channel
Sheefeni, J.P.S. and Ocran, M.

This paper investigates the presence and significance of the credit channel of the monetary policy transmission in Namibia over the period 1993:Q1 – 2011:Q4. The empirical analysis was conducted using innovation accounting tools such as impulse response functions and variance decompositions obtained from a structural vector autoregressive model (SVAR). The results of econometric analysis support the presence of a significant bank lending channel in Namibia, that is, changes in the monetary policy instruments affect the credit variable which in turn transmits the shocks to output and prices. The study established that the credit channel serves as a good vehicle to transmit shocks innovated by monetary policy actions to the economy.

Keywords: Namibia, transmission mechanisms, credit channel, monetary policy, structural vector auto regression