On the Stability of Money Demand in Ghana: A Bounds Testing Approach
19 Pages Posted: 20 Dec 2011
Date Written: November 2011
This paper adopts the bounds testing procedure developed by Pesaran et al. (2001) to test the stability of the long-run money demand for Ghana. The results provide strong evidence for the presence of a stable, well-identified long-run money demand during a period of substantial changes in the financial markets. The empirical evidence points to complex dynamics between money demand and its determinants while suggesting that deviations from the equilibrium are rather short-lived.
Keywords: Capital markets, Demand for money, Inflation targeting, Monetary policy
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