Published on October 14, 2025 – Updated on October 14, 2025

Research focus


Djeneba Dramé,
Researcher, EconomiX, Université Paris Nanterre 
Guest researcher, COFEB, BCEAO 


Florian Léon,
Research Officer, Fondation pour les Etudes et Recherches sur le Développement International (FERDI)
Associate researcher, CERDI-UCA-CNRS-IRD

In an era of economic uncertainty and escalating geopolitical risks, global growth is slowing while inflationary pressures persist. Policymakers face a delicate trade-off: curbing inflation without stifling recovery—a challenge that is especially acute in developing economies, where traditional tools often fall short. While monetary policy is a cornerstone of economic management, its real-world impact in these countries remains debated.

Our recent study (Dramé and Léon, 2025) sheds light on this issue by examining how firms adjust their behavior in response to monetary policy changes. We find that managers do react to both tightening and easing measures—but their responses vary widely, revealing significant heterogeneity.

Read the blog article in French
 

Référence de l’article publié

Dramé, D. & Léon, F. (2025). Do firms react to monetary policy in developing countries? European Economic Review, Vol. 178, September, 105102. 

Bibliographie

  • Abuka, C., Alinda, R.K., Minoiu, C., Peydro, J-L. & Presbitero, A. (2019). Monetary policy and bank lending in developing countries. Journal of Development Economics, 139, 185-202. 
  • Berg, A., Charry, L., Portillo, A. & Vlcek, J. (2019). The monetary transmission mechanism in the tropics: A narrative approach. Journal of African Economies, 28(3), 225-251. 
  • Li, B.G., Adam, C., Berg, A., Montiel, P. & O’Connell, S. (2019). Structural VARs and the monetary transmission mechanism in low-income African countries. Journal of African Economies, 28(4), 455-478. 
  • Willems, T. (2020). What do monetary contraction do? Evidence from large tightenings. Review of Economic Dynamics, 38, 41-58.