The Stability of Money Demand in South Africa, 1965-1997
After the adoption of more market-oriented monetary policy measures in 1980, the South African Reserve Bank primarily relied on setting predetermined growth targets for M3 to achieve its primary objective of price stability. The main purpose of this paper is to test empirically whether there exists a stable long-run demand for money function over the period 1965-1997. The empirical results suggest that there exists a stable long-run demand for money function for M3 in South Africa, while the demand for M1 and M2 display parameter instability following financial reforms since 1980. The results largely support the South African Reserve Bank's view that the M3 money stock could serve as an indicator for monetary policy.
|Date of creation:||Feb 1999|
|Date of revision:|
|Contact details of provider:|| Postal: School of Economics, University of Kent, Canterbury, Kent, CT2 7NP|
Phone: +44 (0)1227 827497
Web page: http://www.kent.ac.uk/economics/
|Order Information:|| Email: |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Friedman, Milton, 1971. "A Monetary Theory of Nominal Income," Journal of Political Economy, University of Chicago Press, vol. 79(2), pages 323-37, March-Apr.
- Choudhry, Taufiq, 1995. "High inflation rates and the long-run money demand function: Evidence from cointegration tests," Journal of Macroeconomics, Elsevier, vol. 17(1), pages 77-91.
- Alan Carruth & Jose Roberto Sanchez-Fung, 2000.
"Money demand in the Dominican Republic,"
Taylor & Francis Journals, vol. 32(11), pages 1439-1449.
- Montiel, Peter J, 1996.
"Financial Policies and Economic Growth: Theory, Evidence and Country-Specific Experience from Sub-Saharan Africa,"
Journal of African Economies,
Centre for the Study of African Economies (CSAE), vol. 5(3), pages 65-98, October.
- Montiel, P.J., 1995. "Financial Policies and Economic Growth: Theory, Evidence and Country-Specific Experience from Sub-Saharan Africa," Papers 18s, African Economic Research Consortium.
- McKinnon, Ronald & Tan, Kong-Yam, 1983. "Currency Substitution and Instability in the World Dollar Standard: Reply," American Economic Review, American Economic Association, vol. 73(3), pages 474-76, June.
- Pierre Perron & Robert J. Shiller, 1984.
"Testing the Random Walk Hypothesis: Power Versus Frequency of Observation,"
Cowles Foundation Discussion Papers
732, Cowles Foundation for Research in Economics, Yale University.
- Shiller, Robert J. & Perron, Pierre, 1985. "Testing the random walk hypothesis : Power versus frequency of observation," Economics Letters, Elsevier, vol. 18(4), pages 381-386.
- Robert J. Shiller & Pierre Perron, 1985. "Testing the Random Walk Hypothesis: Power versus Frequency of Observation," NBER Technical Working Papers 0045, National Bureau of Economic Research, Inc.
- Hoffman, Dennis L. & Rasche, Robert H. & Tieslau, Margie A., 1995. "The stability of long-run money demand in five industrial countries," Journal of Monetary Economics, Elsevier, vol. 35(2), pages 317-339, April.
- Mankiw, N Gregory & Summers, Lawrence H, 1986. "Money Demand and the Effects of Fiscal Policies," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 18(4), pages 415-29, November.
- Milton Friedman, 1959.
"The Demand for Money: Some Theoretical and Empirical Results,"
National Bureau of Economic Research, Inc, number frie59-1, September.
- Milton Friedman, 1959. "The Demand for Money: Some Theoretical and Empirical Results," Journal of Political Economy, University of Chicago Press, vol. 67, pages 327.
- Milton Friedman, 1959. "The Demand for Money: Some Theoretical and Empirical Results," NBER Chapters, in: The Demand for Money: Some Theoretical and Empirical Results, pages 1-29 National Bureau of Economic Research, Inc.
- Miller, Stephen M, 1991. "Monetary Dynamics: An Application of Cointegration and Error-Correction Modeling," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 23(2), pages 139-54, May.
- Abdur Chowdhury, 1997. "The financial structure and the demand for money in Thailand," Applied Economics, Taylor & Francis Journals, vol. 29(3), pages 401-409.
- Taylor, Mark P, 1994. "On the Reinterpretation of Money Demand Regressions," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(4), pages 851-66, November.
- Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
- David F. Hendry & Neil R. Ericsson, 1989. "An econometric analysis of UK money demand in MONETARY TRENDS IN THE UNITED STATES AND THE UNITED KINGDOM by Milton Friedman and Anna J. Schwartz," International Finance Discussion Papers 355, Board of Governors of the Federal Reserve System (U.S.).
When requesting a correction, please mention this item's handle: RePEc:ukc:ukcedp:9905. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tracey Girling)
If references are entirely missing, you can add them using this form.