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On the Instability of Tunisian Money Demand: Some Empirical Issues with Structural Breaks

Author

Listed:
  • Nidhal Mgadmi

    (University of Jendouba)

  • Houssem Rachdi

    (Tunisia & IPAG Business School)

  • Hichem Saidi

    (University of Manouba)

  • Khaled Guesmi

    (IPAG Business School)

Abstract

This paper focuses on the causes of instability of money demand in Tunisia between 1973 and 2013. It has been argued that the main explanatory factors of money demand are national income, monetary market rate and exchange rate. We tested Ambler and McKinnon hypothesis (1985), which assumes that instability is explained by the absence of the nominal exchange rate in the specification of money demand. We found that structural changes are explained by the dependence of the national economy to world shocks, the IMF’s structural adjustment programme at the end of 1986.

Suggested Citation

  • Nidhal Mgadmi & Houssem Rachdi & Hichem Saidi & Khaled Guesmi, 2019. "On the Instability of Tunisian Money Demand: Some Empirical Issues with Structural Breaks," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 17(1), pages 153-165, March.
    • Handle: RePEc:spr:jqecon:v:17:y:2019:i:1:d:10.1007_s40953-018-0123-x
    DOI: 10.1007/s40953-018-0123-x
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    References listed on IDEAS

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    More about this item

    Keywords

    Money demand; Structural change tests; Causality tests; Stability tests;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling

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