The Demand for Money in Cote d’Ivoire: Evidence from the Cointegration Test.

Drama, Bedi Guy Herve and Yao, Shen (2010): The Demand for Money in Cote d’Ivoire: Evidence from the Cointegration Test.

Abstract

This paper demonstrates that there is a long run equilibrium relationship between money supply 〖(M〗_1) and its main determinants, real income (GDP) and interest rate in Cote d’Ivoire. In order to investigate long-term relationship among these variables, we use Juselius and Johansen cointegration test with time series data covering the period of 1980-2007. The results show that there is long-term relationship among these variables as well as the linkage between them. Base from this result we found that only real money balances 〖(M〗_1) has significant long -run economic impact of variations in monetary policy in Cote d’Ivoire. However, the study also revealed that the effect of aggregate 〖(M〗_2) is not so stable linking with it determinants.

• Item Type: MPRA Paper
• Language: English
• Keywords: Cointegration test, Money demand
• Subjects: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy

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