Zimbabwe: A Quest for a Nominal Anchor

41 Pages Posted: 15 Feb 2006

See all articles by Arto Kovanen

Arto Kovanen

International Monetary Fund (IMF) - African Department

Date Written: July 2004


This study examines the appropriateness of alternative intermediate monetary policy targets for Zimbabwe in light of the stability of the demand for money and the information content of financial variables for predicting price level movements. Results of the study indicate that a well-defined long-run demand relation exists for currency in circulation, but not for other monetary aggregates. Currency in circulation has strong information content for predicting future price level movements. The information content of other financial variables, such as the exchange rate and interest rates, is weaker. Statistical relationships break down of the outset of high inflation.

Keywords: Monetary policy, demand for money, nominal anchors, inflation

JEL Classification: E31, E41, E61

Suggested Citation

Kovanen, Arto, Zimbabwe: A Quest for a Nominal Anchor (July 2004). IMF Working Paper No. WP/04/130, Available at SSRN: https://ssrn.com/abstract=878955

Arto Kovanen (Contact Author)

International Monetary Fund (IMF) - African Department ( email )

1700 19th Street, NW
Washington, DC 20431
United States

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