United States of Americas monetary policy transmission to 8 African countries: Exploring three unexplored channels

This paper explores three key international transmission channels of the United States (US) monetary policy from African perspective using the Bayesian VAR (BVAR) framework with monthly data over the period 2006 to 2024 and sheds light on the relative strength of the transmission channels.After examining the integrational properties of the data and estimating the models, the impulse response functions and forecast error variance decompositions revealed that capital flows (CFLs) is a stronger transmission channel of US monetary policy than exchange rate (EXR) and interest rate differential (IRD) channels, and the conventional monetary policy shocks are transmitted more strongly to all the countries except Ghana, Morocco and Kenya where the unconventional monetary policy shocks are more strongly transmitted through CFLs.However, whilst the IRD channel does not transmit conventional US monetary policy shocks to Ghana and Egypt, the CFLs and EXR channels do not transmit, respectively, the conventional and unconventional shocks to Morocco, Nigeria, and South Africa, which could be due to the exclusion of some influential variables from the study model.Future research should consider global factors that can influence international transmission of US monetary policy for improved results.Capital control, macroprudential policies, and central bank interventions in Africa's forex market can control CFLs and mitigate their associated risks on African economies.