scholarly journals THE STABILITY OF MONEY DEMAND FUNCTION: EVIDENCE FROM SOUTH AFRICA

2020 ◽  
Vol 10 (5) ◽  
pp. 16-22
Author(s):  
Farhan Abdi Omar ◽  
Abdishakur Mohamed Hussein
Keyword(s):  
South Africa ◽  
Money Demand ◽  
Demand Function ◽  
Money Demand Function ◽  
The Stability

scholarly journals Comparative Analysis of the Stability of Money Demand between Côte d’Ivoire And Ghana: An Application of ARDL Model

2017 ◽  
Vol 9 (11) ◽  
pp. 163
Author(s):  
Yao Kouadio Ange-Patrick ◽  
Drama Bédi Guy Hervé
Keyword(s):  
Cote D'ivoire ◽  
Money Demand ◽  
Côte D’Ivoire ◽  
Demand Function ◽  
African Countries ◽  
Money Demand Function ◽  
Cote D’Ivoire ◽  
Côte D'ivoire ◽  
Short Run ◽  
The Stability

This paper empirically examined the broad money demand function and its stability in two West African countries namely Cote d’Ivoire and Ghana covering the period of 1980 to 2015 using the Autoregressive Distributed Lag (ARDL) Bounds testing procedure. The empirical results confirm the stability of the money demand function and support the choice of M2 as a viable instrument for policy implementation in both countries cited above. The study also demonstrates that a long-run relationship exists between money aggregate (M2) and its determinants during the study period. In fact, the real income tends to be the most significant factor explaining the demand for broad money in both countries. In addition, the overall short run estimation of our model is statistically significant for Cote d’Ivoire and insignificant for Ghana at the conventional level. This means that money demand is stable for Cote d’Ivoire in short run and unstable for Ghana in the same period. It is recommended that monetary policy authorities should continue to implement policies that will reinforce macroeconomic stability and facilitate economic growth.

scholarly journals On the (Ir)Relevance of Monetary Aggregate Targeting in Pakistan: An Eclectic View

2013 ◽  
Vol 18 (2) ◽  
pp. 65-119
Author(s):  
Adnan Haider ◽  
Asad Jan ◽  
Kalim Hyder
Keyword(s):  
Monetary Policy ◽  
Money Demand ◽  
Demand Function ◽  
Policy Framework ◽  
Monetary Aggregate ◽  
Money Demand Function ◽  
Financial Innovations ◽  
The Stability ◽  
Nominal Anchor ◽  
Monetary Policy Framework

This study attempts to identify a stable money demand function for Pakistan’s economy, where the monetary aggregate is considered the nominal anchor. With evolving financial innovations and regulations, the stability of money demand has been the focus of numerous debates. Where earlier studies have provided conflicting explanations due to inadequate specifications and imprecise estimations, we find that money demand in Pakistan is stable, if specified properly. For developing countries such as Pakistan, it is important to target monetary aggregates or respond to deviations from the desirable path if monetary policy is to be effectively implemented and communicated; this should remain, if not a primary, then an auxiliary target in the monetary policy framework.

Testing the stability of money demand function in Lesotho

2018 ◽  
Vol 10 (4) ◽  
pp. 383
Author(s):  
Moeti Damane ◽  
Lira P. Sekantsi ◽  
Senei Solomon Molapo
Keyword(s):  
Money Demand ◽  
Demand Function ◽  
Money Demand Function ◽  
The Stability

scholarly journals Money Demand In South Africa Revisited: A Detailed Analysis Of Different Models

2013 ◽  
Vol 12 (4) ◽  
pp. 427
Author(s):  
Ferdinand Niyimbanira
Keyword(s):  
South Africa ◽  
Monetary Policy ◽  
South African ◽  
Money Demand ◽  
Demand Function ◽  
Theory And Practice ◽  
Empirical Literature ◽  
Future Research ◽  
Demand For Money ◽  
Money Demand Function

Many macroeconomists acknowledge the importance of behavior in a money demand relationship when formulating an efficient monetary policy. Many efforts have been made to estimate the money demand in function using many different specifications. This paper discusses South African empirical literature review of money demand. It revealed that different methods have been used to analyze the demand for money in South Africa, such as the linear function approach, the partial stock adjustment model, and the buffer stock disequilibrium money model. This study also discovered that few studies are done using co-integration and error correction methods and not all of these studies show that the money demand function in South Africa is stable. Implication for theory and practice, as well as area of future research, are also discussed in the study.

Testing the stability of money demand function in Lesotho

2018 ◽  
Vol 10 (4) ◽  
pp. 383
Author(s):  
Moeti Damane ◽  
Lira P. Sekantsi ◽  
Senei Solomon Molapo
Keyword(s):  
Money Demand ◽  
Demand Function ◽  
Money Demand Function ◽  
The Stability

scholarly journals Structural Breaks, Stability and Demand for Money in South Africa

2015 ◽  
Vol 7 (5(J)) ◽  
pp. 79-90
Author(s):  
Sambulo Malumisa
Keyword(s):  
South Africa ◽  
Money Demand ◽  
Structural Breaks ◽  
Demand Function ◽  
Money Demand Function ◽  
Correction Model ◽  
Cointegrating Vector ◽  
Long Run ◽  
Maximum Likelihood Procedure ◽  
Policy Shifts

The paper tests the null hypothesis of a stable long-run money demand in South Africa over the period 1970-2013. We employ the Gregory-Hansen (GH) method to test for the possibility of structural breaks in the money demand function. The Johansen Maximum likelihood procedure is carried out to determine the cointegration vector from which existence of one cointegrating vector is supported. Also based on the GH criterion, there is existence of one cointegrating vector. GH proposes three structural breaks for the money demand function. Results suggest that endogenous breaks occurred in 1991 and 1994. The GH cointegration equations reject M1 whilst M2 and M3 pass and we proceed to estimate the error-correction model. Complemented by the CUSUM and CUSUM of squares, the tests carried out suggest that monetary policy shifts did not introduce instability.

scholarly journals Structural Adjustment And The Stability Of The Nigerian Money Demand Function

2011 ◽  
Vol 3 (8) ◽  
Author(s):  
Olugbenga A. Onafowora ◽  
Oluwole Owoye
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Money Demand ◽  
Structural Adjustment ◽  
Demand Function ◽  
Money Demand Function ◽  
The Real ◽  
Long Run ◽  
The Stability ◽  
Domestic Interest Rate

This paper uses cointegration vector error correction analysis to test the stability of the demand for real broad money (M2) in Nigeria over the quarterly period 1986:1 to 2001:4 in order to ascertain whether recent macroeconomic developments such as the implementation of the structural adjustment programme (SAP) in 1986; the liberalization of the exchange rate, domestic interest rate, and capital accounts; financial deepening and innovations; changes in monetary policy regimes; and increased integration of the economy with the rest of the world may have caused the real broad money demand function to become structurally unstable. Our empirical results indicate that there exists a long-run relationship between the real broad money aggregate, real income, inflation rate, domestic interest rate, foreign interest rate, and expected exchange rate. Furthermore, both the CUSUM and CUSUMSQ tests confirm the stability of the short- and long run parameters of the real money demand function. The stability of the parameters of the money demand equation provides the justification for the monetary authority to target the broad money supply in its bid to manage inflation and stimulate economic activity in Nigeria.

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