The Gambia: Demand for Broad Money and Implications for Monetary Policy Conduct

Author/Editor: Sriram, Subramanian S.
Publication Date: September 01, 2009
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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 evaluates the demand for broad money (M2) in The Gambia for January 1988-June 2007. There appears to be a long-run relationship for demand for real M2, but the relationship is not stable. Exogenous output shocks, financial innovation, changes in income velocity, and inadequate data quality contribute to the instability. The authorities may need to apply the monetary targeting regime flexibly in the overall objective of preserving price stability. A possible option for The Gambia is to become an inflation targeter lite.
Series: Working Paper No. 09/192
Subject(s): Central bank policy | Commercial banks | Demand for money | Economic growth | Economic models | Financial sector | Gambia, The | Inflation targeting | Interest rates on deposits | Liquidity | Monetary policy | Price stabilization | Sub-Saharan Africa | Time series

Author's Keyword(s): Broad money | cointegration | error-correction | inflation targeter lite | inflation tergeting | M2 | monetary policy | money demand | sub-Saharan Africa | The Gambia
Publication Date: September 01, 2009
Format: Paper
Stock No: WPIEA2009192 Pages: 41
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