Money demand stability: A case study of Nigeria

Saten Kumar (), Don Webber and Scott Fargher
Additional contact information
Saten Kumar: Department of Economics, Auckland University of Technology, Auckland, New Zealand.

No 2011-02, Working Papers from Auckland University of Technology, Department of Economics

Abstract: This paper presents an empirical investigation into the level and stability of money demand (M1) in Nigeria between 1960 and 2008. In addition to estimating the canonical specification, alternative models are presented that include additional variables to proxy for the cost of holding money. Results suggest that the canonical specification is well-determined, the money demand relationship went through a regime shift in 1986 which slightly improved the scale economies of money demand, and money demand is stable. These findings question the appropriateness of the Central Bank of Nigeria’s new monetary policy framework in which short-term interest rates play a crucial role and imply that Nigeria could effectively use the supply of money as an instrument of monetary policy.

Keywords: Money demand; Structural breaks; Cointegration; Monetary policy (search for similar items in EconPapers)
JEL-codes: C22 E21 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2011-08
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.aut.ac.nz/__data/assets/pdf_file/0015/ ... omics-WP-2011-02.pdf (application/pdf)

Related works:
Journal Article: Money demand stability: A case study of Nigeria (2013)
Working Paper: Money demand stability: A case study of Nigeria (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aut:wpaper:201102

Access Statistics for this paper

More papers in Working Papers from Auckland University of Technology, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Gail Pacheco ().