Zimbabwe: A Quest for a Nominal Anchor
July 1, 2004
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Summary
This study examines the appropriateness of alternative intermediate monetary policy targets for Zimbabwe in light of the stability of the demand for money and the information content of financial variables for predicting price level movements. Results of the study indicate that a well-defined long-run demand relation exists for currency in circulation, but not for other monetary aggregates. Currency in circulation has strong information content for predicting future price level movements. The information content of other financial variables, such as the exchange rate and interest rates, is weaker. Statistical relationships break down of the outset of high inflation.
Subject: Currencies, Demand for money, Depreciation, Exchange rates, Foreign exchange, Inflation, Monetary base, Money, National accounts, Prices
Keywords: and inflation, consumer price inflation, crawling-peg exchange rate regime, Currencies, currency demand, currency depreciation, demand for money, Depreciation, exchange rate, Exchange rates, Inflation, innovation affect inflation, Monetary policy, money demand relation, narrow money, nominal anchors, price level, price level variance, reserve money granger, Sub-Saharan Africa, WP, year-on-year inflation
Pages:
41
Volume:
2004
DOI:
Issue:
130
Series:
Working Paper No. 2004/130
Stock No:
WPIEA1302004
ISBN:
9781451855227
ISSN:
1018-5941
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