The Demand for Money in Cote d’Ivoire: Evidence from the Cointegration Test

Bedi Guy Herve Drama and Shen Yao

MPRA Paper from University Library of Munich, Germany

Abstract: This paper demonstrates that there is a long run equilibrium relationship between money supply 〖(M〗_1) and its main determinants, real income (GDP) and interest rate in Cote d’Ivoire. In order to investigate long-term relationship among these variables, we use Juselius and Johansen cointegration test with time series data covering the period of 1980-2007. The results show that there is long-term relationship among these variables as well as the linkage between them. Base from this result we found that only real money balances 〖(M〗_1) has significant long -run economic impact of variations in monetary policy in Cote d’Ivoire. However, the study also revealed that the effect of aggregate 〖(M〗_2) is not so stable linking with it determinants.

Keywords: Cointegration test; Money demand (search for similar items in EconPapers)
JEL-codes: E52 (search for similar items in EconPapers)
Date: 2010-01-19
New Economics Papers: this item is included in nep-mac and nep-mon
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Citations: View citations in EconPapers (5)

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