IMF Working Papers

The Gambia: Demand for Broad Money and Implications for Monetary Policy Conduct

By Subramanian S Sriram

September 1, 2009

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Subramanian S Sriram. The Gambia: Demand for Broad Money and Implications for Monetary Policy Conduct, (USA: International Monetary Fund, 2009) accessed November 21, 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 evaluates the demand for broad money (M2) in The Gambia for January 1988-June 2007. There appears to be a long-run relationship for demand for real M2, but the relationship is not stable. Exogenous output shocks, financial innovation, changes in income velocity, and inadequate data quality contribute to the instability. The authorities may need to apply the monetary targeting regime flexibly in the overall objective of preserving price stability. A possible option for The Gambia is to become an inflation targeter lite.

Subject: Commercial banks, Demand for money, Financial institutions, Inflation, Monetary base, Money, Prices, Treasury bills and bonds

Keywords: Africa, Broad money, Cointegration, Commercial banks, Demand for money, Error-correction, Gambia, Global, Inflation, Inflation targeter lite, Inflation targeting, M2, Market forces, Monetary base, Monetary policy, Money demand, Money yield, Open economy, Opportunity cost, Rate of inflation, Real GDP, Sub-Saharan Africa, The Gambia, Treasury bills and bonds, Treasury bills yield, U.S. dollar, West Africa, WP, Yield

Publication Details

  • Pages:

    41

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2009/192

  • Stock No:

    WPIEA2009192

  • ISBN:

    9781451873399

  • ISSN:

    1018-5941