The impact of Monetary Policy on Economic Growth in Countries with different levels of Economic Freedom

Details

Supervisors

Yuliya Rychalovska

Faculty

Faculté des sciences économiques, sociales, politiques et de communication

Degree label

Master [120] en sciences économiques, orientation économétrie, à finalité approfondie

Abstract

This study explores the impact of different monetary policy regimes on economic growth in countries through the prism of economic freedom. By analyzing data from the World Bank and IMF, the study investigates how the choice of nominal anchors—such as inflation targeting, exchange rate targeting, and money supply targeting—affects real GDP growth. It introduces a novel approach by clustering countries based on their economic freedom and examining the long-term effects of monetary policy within these clusters. The findings highlight that economic freedom plays a critical role in determining the effectiveness of monetary policy, with implications for policymakers aiming to balance economic growth and stability. This research contributes to the existing literature by incorporating a comprehensive set of control variables and providing new insights into the interaction between monetary policy and economic freedom. The results emphasize the necessity of tailored monetary policies that consider the specific economic environments of different countries to achieve sustainable growth.