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An Errorcorrection Approach to Demand for Money in Five African Developing Countries

An Errorcorrection Approach to Demand for Money in Five African Developing Countries Applies an errorcorrection model to demand for money in fiveAfrican economies Congo, Cte dIvoire, Mauritius, Morocco andTunisia. Attention is given to a set of opportunity cost variablesincluding expected inflation, domestic interest rate, foreign interestrate and expected exchangerate depreciation. The empirical results showthat the domestic interest rate plays a significant role in the demandfor money functions for three of the five countries and externalopportunity cost variables are significant for one of the others. Theresults show some diversity in money demand behaviour in the countriesstudied, but the error correction mechanism is always significant and infour out of five cases there is a shortrun inflation impact. Theequations are subjected to a battery of tests and found to bestatistically wellbehaved. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Economic Studies Emerald Publishing

An Errorcorrection Approach to Demand for Money in Five African Developing Countries

Journal of Economic Studies , Volume 19 (1) – Jan 1, 1992

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0144-3585
DOI
10.1108/01443589210015935
Publisher site
See Article on Publisher Site

Abstract

Applies an errorcorrection model to demand for money in fiveAfrican economies Congo, Cte dIvoire, Mauritius, Morocco andTunisia. Attention is given to a set of opportunity cost variablesincluding expected inflation, domestic interest rate, foreign interestrate and expected exchangerate depreciation. The empirical results showthat the domestic interest rate plays a significant role in the demandfor money functions for three of the five countries and externalopportunity cost variables are significant for one of the others. Theresults show some diversity in money demand behaviour in the countriesstudied, but the error correction mechanism is always significant and infour out of five cases there is a shortrun inflation impact. Theequations are subjected to a battery of tests and found to bestatistically wellbehaved.

Journal

Journal of Economic StudiesEmerald Publishing

Published: Jan 1, 1992

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