Estimating the Demand for Money in an Unstable Open Economy: The Case of the Fiji Islands

P K Narayan and S Narayan
Authors registered in the RePEc Author Service: Paresh Kumar Narayan () and Seema Narayan ()

Economic Issues Journal Articles, 2008, vol. 13, issue 1, 71-91

Abstract: In this paper, we estimate Fiji's money demand function for the period 1971-2002 based on the bounds testing approach to cointegration, which is applicable irrespective of whether or not the underlying variables are non-stationary. We estimate models with and without a time trend and for lag lengths ranging from 1-3, but fail to find any evidence for a long-run relationship. Moreover, our structural break analysis suggests that the unstable nature of Fiji's money demand may be due to atypical events, such as coups; the implementation of policies, such as devaluations and value added tax; and the onset of trade liberalisation policies over the last two decades. ?

Date: 2008
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Citations: View citations in EconPapers (17)

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