Monetary and Fiscal Policy Shocks and Economic Growth in Kenya: VAR Econometric Approach

Mutuku Cyrus; koech Elias

doi:doi:10.11648/j.jwer.20140306.14

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Monetary and Fiscal Policy Shocks and Economic Growth in Kenya: VAR Econometric Approach

Mutuku Cyrus, koech Elias

Published in Journal of World Economic Research (Volume 3, Issue 6)

Received: 31 October 2014 Accepted: 19 November 2014 Published: 25 November 2014

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Abstract

In macroeconomic policy design and management, monetary and fiscal policies are of great essence. However, the relative effectiveness of these policies has been subject to debate in both theoretical and practical realms for a long period of time. This paper investigated the relative potency of the policies in altering real output in Kenya using a recursive vector autoregressive (VAR) framework. The analysis of variance decomposition and impulse response functions reveled that fiscal policy has a significant positive impact on real output growth in Kenya while monetary policy shocks are completely insignificant with fiscal policy shock significantly alters the real output for a period of almost eight quarters.

Published in	Journal of World Economic Research (Volume 3, Issue 6)
DOI	10.11648/j.jwer.20140306.14
Page(s)	95-108
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2014. Published by Science Publishing Group

Keywords

Monetary Policy, Fiscal Policy, Vector Autoregressive Model, Real Output, Policy Design

References

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Mutuku Cyrus, koech Elias. (2014). Monetary and Fiscal Policy Shocks and Economic Growth in Kenya: VAR Econometric Approach. Journal of World Economic Research, 3(6), 95-108. https://doi.org/10.11648/j.jwer.20140306.14

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Mutuku Cyrus; koech Elias. Monetary and Fiscal Policy Shocks and Economic Growth in Kenya: VAR Econometric Approach. J. World Econ. Res. 2014, 3(6), 95-108. doi: 10.11648/j.jwer.20140306.14

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AMA Style

Mutuku Cyrus, koech Elias. Monetary and Fiscal Policy Shocks and Economic Growth in Kenya: VAR Econometric Approach. J World Econ Res. 2014;3(6):95-108. doi: 10.11648/j.jwer.20140306.14

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@article{10.11648/j.jwer.20140306.14,
  author = {Mutuku Cyrus and koech Elias},
  title = {Monetary and Fiscal Policy Shocks and Economic Growth in Kenya: VAR Econometric Approach},
  journal = {Journal of World Economic Research},
  volume = {3},
  number = {6},
  pages = {95-108},
  doi = {10.11648/j.jwer.20140306.14},
  url = {https://doi.org/10.11648/j.jwer.20140306.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20140306.14},
  abstract = {In macroeconomic policy design and management, monetary and fiscal policies are of great essence. However, the relative effectiveness of these policies has been subject to debate in both theoretical and practical realms for a long period of time. This paper investigated the relative potency of the policies in altering real output in Kenya using a recursive vector autoregressive (VAR) framework. The analysis of variance decomposition and impulse response functions reveled that fiscal policy has a significant positive impact on real output growth in Kenya while monetary policy shocks are completely insignificant with fiscal policy shock significantly alters the real output for a period of almost eight quarters.},
 year = {2014}
}

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TY  - JOUR
T1  - Monetary and Fiscal Policy Shocks and Economic Growth in Kenya: VAR Econometric Approach
AU  - Mutuku Cyrus
AU  - koech Elias
Y1  - 2014/11/25
PY  - 2014
N1  - https://doi.org/10.11648/j.jwer.20140306.14
DO  - 10.11648/j.jwer.20140306.14
T2  - Journal of World Economic Research
JF  - Journal of World Economic Research
JO  - Journal of World Economic Research
SP  - 95
EP  - 108
PB  - Science Publishing Group
SN  - 2328-7748
UR  - https://doi.org/10.11648/j.jwer.20140306.14
AB  - In macroeconomic policy design and management, monetary and fiscal policies are of great essence. However, the relative effectiveness of these policies has been subject to debate in both theoretical and practical realms for a long period of time. This paper investigated the relative potency of the policies in altering real output in Kenya using a recursive vector autoregressive (VAR) framework. The analysis of variance decomposition and impulse response functions reveled that fiscal policy has a significant positive impact on real output growth in Kenya while monetary policy shocks are completely insignificant with fiscal policy shock significantly alters the real output for a period of almost eight quarters.
VL  - 3
IS  - 6
ER  -

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Author Information

Mutuku Cyrus

Kenya Institute for Public Policy research and Analysis, Nairobi, Kenya
koech Elias

School of Business and Economics, Mount Kenya University , Nairobi, Kenya

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Mutuku Cyrus, koech Elias. (2014). Monetary and Fiscal Policy Shocks and Economic Growth in Kenya: VAR Econometric Approach. Journal of World Economic Research, 3(6), 95-108. https://doi.org/10.11648/j.jwer.20140306.14

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ACS Style

Mutuku Cyrus; koech Elias. Monetary and Fiscal Policy Shocks and Economic Growth in Kenya: VAR Econometric Approach. J. World Econ. Res. 2014, 3(6), 95-108. doi: 10.11648/j.jwer.20140306.14

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AMA Style

Mutuku Cyrus, koech Elias. Monetary and Fiscal Policy Shocks and Economic Growth in Kenya: VAR Econometric Approach. J World Econ Res. 2014;3(6):95-108. doi: 10.11648/j.jwer.20140306.14

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@article{10.11648/j.jwer.20140306.14,
  author = {Mutuku Cyrus and koech Elias},
  title = {Monetary and Fiscal Policy Shocks and Economic Growth in Kenya: VAR Econometric Approach},
  journal = {Journal of World Economic Research},
  volume = {3},
  number = {6},
  pages = {95-108},
  doi = {10.11648/j.jwer.20140306.14},
  url = {https://doi.org/10.11648/j.jwer.20140306.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20140306.14},
  abstract = {In macroeconomic policy design and management, monetary and fiscal policies are of great essence. However, the relative effectiveness of these policies has been subject to debate in both theoretical and practical realms for a long period of time. This paper investigated the relative potency of the policies in altering real output in Kenya using a recursive vector autoregressive (VAR) framework. The analysis of variance decomposition and impulse response functions reveled that fiscal policy has a significant positive impact on real output growth in Kenya while monetary policy shocks are completely insignificant with fiscal policy shock significantly alters the real output for a period of almost eight quarters.},
 year = {2014}
}

Copy | Download

TY  - JOUR
T1  - Monetary and Fiscal Policy Shocks and Economic Growth in Kenya: VAR Econometric Approach
AU  - Mutuku Cyrus
AU  - koech Elias
Y1  - 2014/11/25
PY  - 2014
N1  - https://doi.org/10.11648/j.jwer.20140306.14
DO  - 10.11648/j.jwer.20140306.14
T2  - Journal of World Economic Research
JF  - Journal of World Economic Research
JO  - Journal of World Economic Research
SP  - 95
EP  - 108
PB  - Science Publishing Group
SN  - 2328-7748
UR  - https://doi.org/10.11648/j.jwer.20140306.14
AB  - In macroeconomic policy design and management, monetary and fiscal policies are of great essence. However, the relative effectiveness of these policies has been subject to debate in both theoretical and practical realms for a long period of time. This paper investigated the relative potency of the policies in altering real output in Kenya using a recursive vector autoregressive (VAR) framework. The analysis of variance decomposition and impulse response functions reveled that fiscal policy has a significant positive impact on real output growth in Kenya while monetary policy shocks are completely insignificant with fiscal policy shock significantly alters the real output for a period of almost eight quarters.
VL  - 3
IS  - 6
ER  -

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