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Stability of the Nigerian M2 Money Demand Function in the SAP Period


  • Emmanuel Anoruo

    () (Coppin State College)


This paper explores the stability of the M2 money demand function in Nigeria in the Structural Adjustment Program (SAP) period. The results from the Johansen and Juselius cointegration test suggest that real discount rate, economic activity and real M2, are cointegrated. The Hansen (1992), CUSUM and CUSUMQ stability test results indicate that the M2 money demand function in Nigeria is stable for the study period. The results of the study show that M2 is a viable monetary policy tool that could be used to stimulate economic activity in Nigeria.

Suggested Citation

  • Emmanuel Anoruo, 2002. "Stability of the Nigerian M2 Money Demand Function in the SAP Period," Economics Bulletin, AccessEcon, vol. 14(3), pages 1-9.
  • Handle: RePEc:ebl:ecbull:eb-02n10001

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    References listed on IDEAS

    1. Godwin Nwaobi, 2002. "A vector error correction and nonnested modeling of money demand function in Nigeria," Economics Bulletin, AccessEcon, vol. 3(4), pages 1-8.
    2. Bahmani-Oskooee, Mohsen, 2001. "How stable is M2 money demand function in Japan?," Japan and the World Economy, Elsevier, vol. 13(4), pages 455-461, December.
    3. Bahmani-Oskooee, Mohsen & Bohl, Martin T., 2000. "German monetary unification and the stability of the German M3 money demand function," Economics Letters, Elsevier, vol. 66(2), pages 203-208, February.
    4. Hansen, Bruce E, 2002. "Tests for Parameter Instability in Regressions with I(1) Processes," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 45-59, January.
    5. Mohsen Bahmani-Oskooee & Michael P. Barry, 2000. "Stability of the Demand for Money in an Unstable Country: Russia," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 22(4), pages 619-629, July.
    6. repec:ebl:ecbull:v:3:y:2002:i:4:p:1-8 is not listed on IDEAS
    7. David Fielding, 1994. "Money Demand in Four African Countries," Journal of Economic Studies, Emerald Group Publishing, vol. 21(2), pages 3-37, May.
    8. Naoko Hamori & Shigeyuki Hamori, 1999. "Stability of the money demand function in Germany," Applied Economics Letters, Taylor & Francis Journals, vol. 6(5), pages 329-332.
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    Cited by:

    1. Kumar, Saten & Webber, Don J. & Fargher, Scott, 2013. "Money demand stability: A case study of Nigeria," Journal of Policy Modeling, Elsevier, vol. 35(6), pages 978-991.
    2. repec:rss:jnljee:v5i2p3 is not listed on IDEAS
    3. Alimi, R. Santos, 2012. "The Quantity Theory of Money and Its Long Run Implications: Empirical Evidence from Nigeria," MPRA Paper 49598, University Library of Munich, Germany.
    4. Folarin, Oludele & Asongu, Simplice, 2017. "Financial liberalization and long-run stability of money demand in Nigeria," MPRA Paper 81190, University Library of Munich, Germany.
    5. Gregory N. Price & Juliet U. Elu, 2014. "Does regional currency integration ameliorate global macroeconomic shocks in sub-Saharan Africa? The case of the 2008-2009 global financial crisis," Journal of Economic Studies, Emerald Group Publishing, vol. 41(5), pages 737-750, September.
    6. Wehnam Peter Dabale & Nelson Jagero, 2013. "Causes of Interest Rate Volatility and its Economic Implications in Nigeria," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(4), pages 27-32, October.
    7. repec:rss:jnljee:v3i4p7 is not listed on IDEAS
    8. Kumar, Saten, 2011. "Financial reforms and money demand: Evidence from 20 developing countries," Economic Systems, Elsevier, vol. 35(3), pages 323-334, September.
    9. Baharumshah, Ahmad Zubaidi & Mohd, Siti Hamizah & Mansur M. Masih, A., 2009. "The stability of money demand in China: Evidence from the ARDL model," Economic Systems, Elsevier, vol. 33(3), pages 231-244, September.
    10. Shehu El-Rasheed & Hussin Abdullah & Jauhari Dahalan, 2017. "Monetary Uncertainty and Demand for Money Stability in Nigeria: An Autoregressive Distributed Lag Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 601-607.

    More about this item


    Money demand Nigeria Cointegration Stability Tests CUSUM CUSUMQ;

    JEL classification:

    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • E0 - Macroeconomics and Monetary Economics - - General


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