Foreign capital inflows and monetary sterilisation in Papua New Guinea

Crawford School of Public Policy

Event details

PhD Seminar (Econ)

Date & time

Friday 05 August 2022


Weston Theatre


Thomas Wangi


Larry Liu
0410 116 888

The central bank uses sterilisation policy to mitigate the monetary effects of foreign capital inflows in PNG. This study employs a 2SLS method to estimate the monetary policy reaction and international capital-flow functions using quarterly data from March 1998 to December 2020. The estimated sterilisation and offset coefficients indicate that monetary sterilization operations have limited success in maintaining the monetary base. Furthermore, the estimated broad sterilisation coefficient of money supply function shows that sterilisation efforts are reduced in terms of money supply. Overall, the findings establish a low degree of monetary control and a least effective monetary sterilisation for PNG.

Updated:  29 January 2023/Responsible Officer:  Crawford Engagement/Page Contact:  CAP Web Team