On the Instability of Tunisian Money Demand: Some Empirical Issues with Structural Breaks

Nidhal Mgadmi (), Houssem Rachdi, Hichem Saidi () and Khaled Guesmi
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Nidhal Mgadmi: University of Jendouba
Houssem Rachdi: Tunisia & IPAG Business School
Hichem Saidi: University of Manouba

Journal of Quantitative Economics, 2019, vol. 17, issue 1, No 7, 153-165

Abstract: Abstract This paper focuses on the causes of instability of money demand in Tunisia between 1973 and 2013. It has been argued that the main explanatory factors of money demand are national income, monetary market rate and exchange rate. We tested Ambler and McKinnon hypothesis (1985), which assumes that instability is explained by the absence of the nominal exchange rate in the specification of money demand. We found that structural changes are explained by the dependence of the national economy to world shocks, the IMF’s structural adjustment programme at the end of 1986.

Keywords: Money demand; Structural change tests; Causality tests; Stability tests (search for similar items in EconPapers)
JEL-codes: C5 E41 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/s40953-018-0123-x

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