Financial Liberalization, Money Demand, and Inflation in Uganda

August 1, 2001

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Jean-Claude Nachega. Financial Liberalization, Money Demand, and Inflation in Uganda, (USA: International Monetary Fund, 2001) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper uses cointegration analysis to investigate the empirical relationship among money, prices, income, and a vector of interest rates in Uganda from 1982 to 1998. Despite the substantial financial market liberalization that has taken place in the early 1990s, quarterly time-series data confirm that a stable relationship prevailed among real broad money, income, and domestic and foreign interest rates. The empirical results indicate income homogeneity, a strong own-rate-of-return effect, a high degree of international capital mobility and asset substitutability, and demonstrate that both domestic and foreign factors are important determinants of inflation in Uganda.

Subject: Demand for money, Financial services, Inflation, Interbank rates, Monetary base, Money, Prices, Velocity of money

Keywords: Broad money velocity, Cointegration, Demand for money, Demand function, Depreciation rate, Exchange rate, Exchange rate depreciation, Financial liberalization, Inflation, Inflation process, Interbank rates, Monetary base, Money demand, Sub-Saharan Africa, Treasury bill, Uganda, Velocity equation, Velocity of money, WP

Publication Details

Pages:

45
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2001/118
Stock No:

WPIEA1182001
ISBN:

9781451854084
ISSN:

1018-5941

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