Money Demand and Inflation in Madagascar

December 1, 2005

Preview Citation

Format: Chicago

Koffie Ben Nassar. Money Demand and Inflation in Madagascar, (USA: International Monetary Fund, 2005) accessed December 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 a two-sector model to estimate the relationship between prices, money, and the exchange rate in Madagascar during the period 1982-2004. The estimated model, using quarterly data, finds a stable long-run relationship among monetary aggregates, domestic prices, real income, and foreign interest rates. In addition, the error-correction model shows that changes in the monetary aggregates, the exchange rate, and foreign interest rates exert a significant impact on inflation. The results also suggest that a disequilibrium in the money market has a lasting impact on inflation. The paper concludes with policy recommendations.

Subject: Demand for money, Exchange rate arrangements, Exchange rates, Inflation, Monetary base

Keywords: Real GDP, WP

Publication Details

Pages:

25
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2005/236
Stock No:

WPIEA2005236
ISBN:

9781451862553
ISSN:

1018-5941

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