Transmission of monetary policy shocks and inflation dynamics in Burundi: a VAR model approach

This study investigates how monetary policy shocks influence inflation in Burundi using the VAR model. The findings reveal that an inflationary shock triggers a sharp rise in prices, followed by a gradual adjustment toward stability. The expansion of the money supply leads to a moderate but persistent increase in inflation, thereby confirming the quantity theory of money. Conversely, the effect of the interest rate appears more limited due to the structural constraints of the Burundian economy, particularly the weakness of the financial system and its reliance on external financing. Finally, the variance decomposition analysis indicates that while past inflation dominates in the short run, the influence of monetary instruments becomes more pronounced in the long run.

• Publication year

  2025

• Venue

  Applied Mathematical Sciences

• Publication date

  Unknown publication date

• Fields of study

  Not labeled

• Identifiers
  DOI 10.12988/ams.2025.91526
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

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• No concepts are published for this paper.

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