Monetary Policy Rules for Managing Aid Surges in Africa

This paper is one of four key papers from my work with O’Connell, Buffie and Pattillo on aid and monetary policy in Africa. The work emerged from a spell as a visiting scholar at the IMF and was funded by an ESRC award under the World Economy and Finance programme. This project, of which this paper has, to date, had the most downloads / citations (although the latter are still limited), was concerned with the positive and normative economics of how low-income countries conduct monetary and fiscal policy in the face of increased capital account volatility. The context was initially the analysis of anticipated aid surges following the Gleneagles G8 Summit in 2005 but the analysis generalizes to a range of policy issues facing low-income countries, including handling volatile commodity prices, remittances and other capital flows. I was the lead author/researcher on the RDE paper, being responsible for model design and simulation and drafting the paper (within the consultative framework we have operated) and sole author/researcher on the extended version of the paper which was published as C.S.Adam, S.O’Connell and E.Buffie (2009) “Aid Volatility, Monetary Policy Rules and the Capital Account in African Economies” in G.Hammond, R.Kanbur and E.Prasad (eds) Monetary Policy Frameworks for Emerging Markets (London, Edward Elgar)