Financial Liberalization, Money Demand, and Inflation in Uganda

Author/Editor: Jean-Claude Nachega
Publication Date: August 01, 2001
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: This paper uses cointegration analysis to investigate the empirical relationship among money, prices, income, and a vector of interest rates in Uganda from 1982 to 1998. Despite the substantial financial market liberalization that has taken place in the early 1990s, quarterly time-series data confirm that a stable relationship prevailed among real broad money, income, and domestic and foreign interest rates. The empirical results indicate income homogeneity, a strong own-rate-of-return effect, a high degree of international capital mobility and asset substitutability, and demonstrate that both domestic and foreign factors are important determinants of inflation in Uganda.
Series: Working Paper No. 01/118
Subject(s): Demand for money | Inflation | Monetary policy | Money demand | Uganda

Author's Keyword(s): Uganda | money demand | inflation | financial liberalization | cointegration
Publication Date: August 01, 2001
ISBN/ISSN: 9781451854084/1018-5941 Format: Paper
Stock No: WPIEA1182001 Pages: 45
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