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Money Demand and Inflation in Madagascar

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  • Koffie Ben Nassar

Abstract

This 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.

Suggested Citation

  • Koffie Ben Nassar, 2005. "Money Demand and Inflation in Madagascar," IMF Working Papers 2005/236, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2005/236
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    References listed on IDEAS

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    Cited by:

    1. International Monetary Fund, 2007. "Republic of Madagascar: Selected Issues," IMF Staff Country Reports 2007/239, International Monetary Fund.
    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.
    3. repec:ilo:ilowps:455446 is not listed on IDEAS
    4. Gerald Epstein & James Heintz & Léonce Ndikumana & Grace Chang, 2011. "Employment, Poverty and Economic Development in Madagascar," Published Studies ndikumana_ilo2010, Political Economy Research Institute, University of Massachusetts at Amherst.
    5. Hossein-Ali Fakher, 2016. "The Empirical Relationship between Fiscal Deficits and Inflation (Case Study: Selected Asian Economies)," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 20(4), pages 551-579, Autumn.
    6. Mr. Tidiane Kinda, 2011. "Modeling Inflation in Chad," IMF Working Papers 2011/057, International Monetary Fund.
    7. Tidiane Kinda, 2013. "Oil windfall, public spending and price stability: modelling inflation in Chad†," Applied Economics, Taylor & Francis Journals, vol. 45(21), pages 3122-3135, July.
    8. repec:kap:iaecre:v:16:y:2010:i:2:p:213-222 is not listed on IDEAS
    9. Mohammad Abdul Munim Joarder & A. K. M. Nurul Hossain & Monir Uddin Ahmed, 2016. "Does the central bank contribute to the political monetary cycles in Bangladesh?," Economic Change and Restructuring, Springer, vol. 49(4), pages 365-394, November.
    10. Epstein, Gerald. & Heintz, James. & Ndikumana, Léonce. & Chang, Grace., 2010. "Employment, poverty and economic development in Madagascar : a macroeconomic framework," ILO Working Papers 994554463402676, International Labour Organization.
    11. International Monetary Fund, 2013. "Algeria: Selected Issues Paper," IMF Staff Country Reports 2013/048, International Monetary Fund.

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    Keywords

    WP; real GDP;

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