TITLE:
The Effect of Fiscal and Monetary Policy on Private Investment in Rwanda
AUTHORS:
Emmanuel Mudacumura, Richard Kabanda
KEYWORDS:
Fiscal and Monetary Policy, Vector Autoregressive Model (VAR), Private
JOURNAL NAME:
Open Access Library Journal,
Vol.11 No.8,
August
13,
2024
ABSTRACT: The study investigated the effect of Fiscal and Monetary Policy on Private Investment in Rwanda. The aim of the study was to examine the impact of fiscal policies on private investment in Rwanda, evaluate the influence of monetary policies on private investment dynamics in the Rwandan economy, and assess the combined effects of fiscal and monetary policies on the overall private investment climate in Rwanda. The VAR model was applied to analyze the relationship between fiscal and monetary policy variables on private investment in Rwanda. The results show a discernible legacy effect of past government spending on current expenditures, highlighting the importance of targeted investment and public-private partnerships. Additionally, the inverse relationship between interest rates and private investment underscores the need for transparent monetary policies. Recommendations include implementing open market operations for inflation control, providing taxation incentives for investors, fostering long-term planning, and enhancing global economic awareness to create a conducive environment for private investment in Rwanda.