The Impact of Monetary Policy on Inflation and Economic Growth through the Exchange Rate Channel: A Case Study of Mauritania Using the NARDL Model for the Period 1985-2022

Abstract

This study aimed to measure the effectiveness of the nominal exchange rate in transmitting the impact of monetary policy on inflation and economic growth in the Mauritanian economy for the period 1985-2022, using a Nonlinear Autoregressive Distributed Lag (NARDL) model.

The results indicated that, in the long run, the impact of negative monetary policy shocks in Mauritania is transmitted to inflation through positive shocks to the nominal exchange rate. Conversely, the impact of positive monetary policy shocks on economic growth occurs in the short run, via negative shocks to the nominal exchange rate.

The study also concluded that there is an asymmetric effect of positive and negative monetary policy shocks on inflation in the long run, while the effects on economic growth are symmetric.