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How Useful is Monetary Econometrics in Low-Income Countries? T+L3104he Case of Money Demand and the Multipliers in Rwanda

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  • Gabriel Di Bella
  • David Hauner

Abstract

This paper revisits the usefulness of econometric monetary analysis in low-income countries in a case study on Rwanda, an interesting case given its floating exchange rate and reliance on indirect monetary policy instruments on the one hand, and its somewhat typical data and institutional shortcomings on the other hand. The findings are generally encouraging for the use of econometric models for monetary analysis in low-income countries. Notwithstanding substantial qualifications, time series and structural models of the money multiplier and money demand yield results that are statistically and economically reasonable enough to usefully inform policymaking.

Suggested Citation

  • Gabriel Di Bella & David Hauner, 2005. "How Useful is Monetary Econometrics in Low-Income Countries? T+L3104he Case of Money Demand and the Multipliers in Rwanda," IMF Working Papers 05/178, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:05/178
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    References listed on IDEAS

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    1. Michelle R. Garfinkel & Daniel L. Thornton, 1991. "The multiplier approach to the money supply process: a precautionary note," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 47-64.
    2. repec:taf:jdevst:v:32:y:1995:i:1:p:97-111 is not listed on IDEAS
    3. Beenstock, Michael, 1989. "The Determinants of the Money Multiplier in the United Kingdom," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 21(4), pages 464-480, November.
    4. Frost, Peter A, 1977. "Short-Run Fluctuations in the Money Multiplier and Monetary Control," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 9(1), pages 165-181, February.
    5. Finn E. Kydland & Scott Freeman, 2000. "Monetary Aggregates and Output," American Economic Review, American Economic Association, vol. 90(5), pages 1125-1135, December.
    6. Mangal Goswami & Oya Celasun, 2002. "An Analysis of Money Demand and Inflation in the Islamic Republic of Iran," IMF Working Papers 02/205, International Monetary Fund.
    7. Albert E. Burger & Robert H. Rasche, 1977. "Revision of the monetary base," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 13-28.
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    Cited by:

    1. repec:kap:iaecre:v:16:y:2010:i:2:p:213-222 is not listed on IDEAS
    2. Marcelin Diagne, 2010. "Real Money Demand, Income, and Interest Rates in Senegal: Is there a Long-Run Stable Relation?," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 16(2), pages 213-222, May.

    More about this item

    Keywords

    Demand for money; Rwanda; Money demand; Monetary policy; money multiplier; monetary base; money balances; inflation;

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