The Mystery behind Foreign Reserve Sterilization: Empirical Evidence from The Gambia

Foday Joof and Turgut Türsoy

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the impact of the foreign reserve on the domestic money supply and the level of sterilization by employing the Auto Regressive Distributed Lag for short-run estimation, the Fully Modified OLS for long run estimation and Granger Causality on a monthly data from 2002 to 2019. The short-run and long-run results revealed that foreign reserve has a positive statistically significant impact on money supply; this suggests a total lack of sterilization on the part of Central Bank of The Gambia. The Granger causality confirms a feedback association between the foreign reserve and broad money supply.

Keywords: Foreign reserve; Money supply; Sterilisation; Central Bank of The Gambia (search for similar items in EconPapers)
JEL-codes: C1 E5 (search for similar items in EconPapers)
Date: 2020-04-28
New Economics Papers: this item is included in nep-afr, nep-mac and nep-mon
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:99929

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