Some new evidence on the determinants of money demand in developing countries – A case study of Tunisia

Ousama Ben Salha and Zied Jaidi
Authors registered in the RePEc Author Service: Ousama Ben-Salha

MPRA Paper from University Library of Munich, Germany

Abstract: The present paper aims at examining the money demand function in Tunisia during the period 1981-2011. Unlike previous conventional money demand studies, the major components of real income are considered in this paper. Using the ARDL bounds testing approach, results reveal evidence of cointegration between broad money demand and its determinants, namely final consumption expenditure, expenditure on investment goods, export expenditure and interest rate. In the long-run, final consumption expenditure represents the major money demand determinant. This finding is robust to a variety of alternative money demand specifications and estimation methods. The empirical investigation suggests also the stability of the broad money demand function during the sample period. We conclude that monetary policy in Tunisia should be based on a broad definition of money. Furthermore, the estimation of the money demand function must take into account the different expenditure components of real income.

Keywords: Money demand; M2; expenditure components; ARDL; Tunisia. (search for similar items in EconPapers)
JEL-codes: C22 E41 E52 (search for similar items in EconPapers)
Date: 2013-11-01
New Economics Papers: this item is included in nep-ara, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/51788/1/MPRA_paper_51788.pdf original version (application/pdf)

Related works:
Journal Article: Some new evidence on the determinants of money demand in developing countries – A case study of Tunisia (2014)
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:pra:mprapa:51788

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().