Abstract

This paper assesses the response of the agriculture sector and food inflation to monetary policy implementation in Malawi, a typical low-income agrarian economy. Using the Bayesian Structural Vector Auto-regressive (B-SVAR) model on data from 1986 to 2023, we find rather interesting picture where tight monetary policy reduces the growth of the sector and fuels both food and overall inflation. In essence, the implementation of unconventional monetary policy to tackle inflation by reducing the policy rate can spur growth of the agriculture sector, which would translate into an increased supply of food on the market and controlled food and overall inflation.

Original language	en
Pages (from-to)	1-20
Publication status	Published - 2025