Stability and predictability of the monetary multiplier in the Democratic Republic of the Congo

Stabilité et prédictibilité du multiplicateur monétaire en République démocratique du Congo *

Hénock Katuala Muanza
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Hénock Katuala Muanza: UPC - Université protestante au Congo

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Abstract: This paper assesses the macroeconometric properties of the Congolese Congolese monetary multiplier through the analysis of its stability and predictability from 1990 to 2019. It has an acceptable value, and its evolution is connected to the macroeconomic, monetary and fi nancial situation of the Democratic Republic of Congo. To achieve this, We used the unit root test ADF to rule on the stationarity of the series, the cointegration test in the sense of Engle-Granger (1987) to analyze the existence of a longterm relationship between the variables and four (4) ARIMA (Box-Jenkins) models to assess the quality of the predictability of this multiplier. We have found that money supply and the money base are linked in the long term, which indicates some stability in the money multiplier. This could justify the use of the multiplier in the conduct of policy and monetary targeting in DR Congo. The existence of the long-term relationship between the base and the money supply confirms its predictability which is better predicted by its trend and seasonal components by using the Hodrick-Prescott (HP) filter.

Date: 2020-05-18
New Economics Papers: this item is included in nep-mac
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