Housing Prices and Money Demand: Empirical Evidence in Selected MENA Countries

Mbazia Nadia () and Djelassi Mouldi
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Mbazia Nadia: Faculty of Economic Sciences and Management of Tunis, University of Tunis El Manar, Tunis, Tunisia
Djelassi Mouldi: Higher School of Economics and Business of Tunis, University of Tunis, Tunis, Tunisia

Review of Middle East Economics and Finance, 2019, vol. 15, issue 1, 18

Abstract: This paper examines the links between housing and money empirically in a money demand framework for a panel of five Middle East and North Africa (MENA) countries using quarterly data from 2007Q3 to 2014Q4 with the inclusion of house prices as a variable representing the developments in housing markets. We applied the Pool Mean Group Estimation technique to estimate the long-run and short-run dynamic relationships in money demand model. Empirical results provide the evidence that higher house prices lead to a rise in M2 demand in long-run and short-run estimations. This finding may explain the importance influence of the house price developments on monetary policy in MENA countries. The results confirm that the cross-country heterogeneity of money holdings is also connected with structural features of the housing market.

Keywords: money demand; housing; panel data; MENA countries (search for similar items in EconPapers)
JEL-codes: C33 E41 E52 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1515/rmeef-2017-0034

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