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The Long-Run Stability of Money in the ProposedE ast AfricanMonetary Union

Author

Listed:
  • Simplice A. Asongu

    (African Governance and Development Institute, Cameroon)

  • Oludele E. Folarin

    (University of Ibadan, Nigeria)

  • Nicholas Biekpe

    (University of Cape Town, South Africa)

Abstract

This study investigates the stability of money in the proposed East African Monetary Union using annual data within 1981-2015 of five countries comprising the East African Community.A standard money demand function is designed and estimated using a bounds testing approach to cointegration and error correction modeling.F indings show that countries exhibit divergence that is articulated in terms of differences in cumulative sum (CUSUM) and CUSUM squared (CUSUMSQ) tests, short- and long-term determinants, and error correction during a shock.B ased on the CUSUM and CUSUMSQ tests, results show that Burundi, Rwanda, and Tanzania have stable money demand, whereas the remaining countries, namely, Kenya and Uganda, have partial stability only.D uring a shock, Kenya is the fastest to restore its long-run equilibrium, followed by Tanzania and Burundi.

Suggested Citation

  • Simplice A. Asongu & Oludele E. Folarin & Nicholas Biekpe, 2020. "The Long-Run Stability of Money in the ProposedE ast AfricanMonetary Union," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 35(3), pages 457-478.
    • Handle: RePEc:ris:integr:0806
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    Cited by:

    1. Silas Kiprono SAMOEI & Edwin Kipyego KIPCHOGE, 2020. "Drivers of Horticultural Exports in Kenya," Journal of Economics and Financial Analysis, Tripal Publishing House, vol. 4(2), pages 27-44.
    2. Muhammad Akbar, 2023. "Effects of inflation uncertainty and exchange rate volatility on money demand in Pakistan: Bayesian econometric analysis," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 1470-1487, April.

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    Keywords

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    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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