The Mystery behind Foreign Reserve Sterilization: Empirical Evidence from The Gambia

Joof, Foday and Tursoy, Turgut (2020): The Mystery behind Foreign Reserve Sterilization: Empirical Evidence from The Gambia.

Abstract

This paper investigates the impact of the foreign reserve on the domestic money supply and the level of sterilization by employing the Auto Regressive Distributed Lag for short-run estimation, the Fully Modified OLS for long run estimation and Granger Causality on a monthly data from 2002 to 2019. The short-run and long-run results revealed that foreign reserve has a positive statistically significant impact on money supply; this suggests a total lack of sterilization on the part of Central Bank of The Gambia. The Granger causality confirms a feedback association between the foreign reserve and broad money supply.

• Item Type: MPRA Paper
• Language: English
• Keywords: Foreign reserve, Money supply, Sterilisation, Central Bank of The Gambia
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit

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