The Long Run Stability of Money Demand in the Proposed West African Monetary Union

Research in International Business and Finance. 48(April), pp. 483-495(2019)

28 Pages Posted: 3 Dec 2018 Last revised: 7 Mar 2019

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Folarin Oludele Emmanuel

University of Ibadan - Department of Economics

Nicholas Biekpe

University of Cape Town (UCT)

Date Written: November 26, 2018

Abstract

This study examines the stability of money demand in the proposed West African Monetary Union (WAMU). The study uses annual data for the period 1981 to 2015 from thirteen of the fifteen countries making-up the Economic Community of West African States (ECOWAS). A standard money demand function is designed and estimated using a bounds testing approach to co-integration and error-correction modeling. The findings show divergence across ECOWAS member states in the stability of money demand. This divergence is informed by differences in cointegration, stability, short run and long term determinants, and error correction in event of a shock.

Keywords: stable; demand for money; bounds test

JEL Classification: E41; C22

Suggested Citation

Asongu, Simplice and Emmanuel, Folarin Oludele and Biekpe, Nicholas, The Long Run Stability of Money Demand in the Proposed West African Monetary Union (November 26, 2018). Research in International Business and Finance. 48(April), pp. 483-495(2019). Available at SSRN: https://ssrn.com/abstract=3290597 or http://dx.doi.org/10.2139/ssrn.3290597

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

Folarin Oludele Emmanuel

University of Ibadan - Department of Economics ( email )

Department of Economics
Ibadan, OK Oyo State 900001
Nigeria

Nicholas Biekpe

University of Cape Town (UCT) ( email )

Private Bag X3
Rondebosch, Western Cape 7701
South Africa

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