A Cointegration Analysis of Broad Money Demand in Cameroon

39 Pages Posted: 30 Jan 2006

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Date Written: March 2001

Abstract

This paper applies cointegration analysis and error-correction modeling to investigate the behavior of broad money demand in Cameroon over 1963/64-1993/94. The cointegrated VAR analysis first describes an open-economy model of money, prices, income, and a vector of rates of return, within which three steady state relations are identified: a stable money demand function, an excess aggregate demand relationship, and the uncovered interest rate relation under fixed exchange rates and perfect capital mobility. Empirical support is thereafter provided for both PPP and the international Fisher parity between Cameroon and France, and the stability of the short-run dynamics of the broad money demand function is confirmed.

Keywords: Cameroon, cointegration, money demand, inflation, fixed exchange rate

JEL Classification: E41, E52, F41

Suggested Citation

Nachega, Jean-Claude, A Cointegration Analysis of Broad Money Demand in Cameroon (March 2001). IMF Working Paper No. 01/26, Available at SSRN: https://ssrn.com/abstract=879377

Jean-Claude Nachega (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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