On the Stability of Money Demand in Ghana: A Bounds Testing Approach

November 1, 2011

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 adopts the bounds testing procedure developed by Pesaran et al. (2001) to test the stability of the long-run money demand for Ghana. The results provide strong evidence for the presence of a stable, well-identified long-run money demand during a period of substantial changes in the financial markets. The empirical evidence points to complex dynamics between money demand and its determinants while suggesting that deviations from the equilibrium are rather short-lived.1

Subject: Bank deposits, Demand for money, Financial services, Foreign exchange, Monetary base, Money, National accounts, Nominal effective exchange rate, Personal income

Keywords: Africa, Bank deposits, bounds testing, Demand for money, Ghana, income elasticity, interest rate, Monetary base, monetary policy implementation, money demand, money demand equation, money demand function, money demand relation, money demand stability, money demand study, Nominal effective exchange rate, Personal income, stability, WP

Pages:
18
Volume:
2011
DOI:
https://doi.org/10.5089/9781463925284.001
Issue:
273
Series:
Working Paper No. 2011/273
Stock No:
WPIEA2011273
ISBN:
9781463925284
ISSN:
1018-5941

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