As part of their World Bank and International Monetary Fund packages, most developing countries are now expected to adopt monetarist policies. Yet these policies have been designed for advanced economies, and there is considerable doubt about whether they are appropriate for less developed countries. "Monetary Policy in Developing Countries" is the first study of this seminal and topical area. Unlike most research and discussion of policy, this study examines both monetary policy and the creation of a modern financial sector in the wider context of overall development.
An international team of leading economists provides case studies of three African and three Asian countries, complemented by special studies of the role of the informal sector and the relationship between monetary policy and exchange rate management. The country studies include statistical background on the economies and their financial sectors, and use some elementary econometric tests to establish what stable relationships can be assumed in the financial sector.
This is the first book to analyze the interaction between monetary policy, the financial sector and the rest of the economy in the context of developing countries. It extends the discussion of the necessary conditions for successful monetary policy and will be extremely important for those involved in formulating these policies.