Money Demand and Inflation in Madagascar
AbstractThis 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.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 05/236.
Date of creation: 01 Dec 2005
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-03-05 (All new papers)
- NEP-CBA-2006-04-02 (Central Banking)
- NEP-IFN-2006-03-07 (International Finance)
- NEP-MAC-2006-03-07 (Macroeconomics)
- NEP-MON-2006-03-06 (Monetary Economics)
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