Demand for Money in Mozambique: Was There a Structural Break?
November 1, 1998
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Summary
The paper provides estimates of an error-correction model of the demand for narrow money (M1) and broad money (M2) in Mozambique. In addition, it assesses whether the rapid growth in money balances during 1996–97 represents a structural break or can be associated with the rapidly expanding economic activity and lower opportunity costs of holding money. In contrast with several studies of economies at a similar level of development as Mozambique, the paper obtains statistically significant coefficients for both financial and real explanatory variables. In this connection, it successfully includes the yield of foreign instruments (expressed in local currency) as one of the key explanatory variables.
Subject: Consumer price indexes, Demand for money, Economic and financial statistics, Exchange rates, Foreign exchange, Inflation, Money, Prices
Keywords: baseline equation, broad money, cointegration, Consumer price indexes, Demand for money, equation, error correction, estimation result, exchange rate, Exchange rates, Inflation, inflation rate, Money, money demand, money demand equation, WP, yield
Pages:
21
Volume:
1998
DOI:
Issue:
157
Series:
Working Paper No. 1998/157
Stock No:
WPIEA1571998
ISBN:
9781451857467
ISSN:
1018-5941
