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Money demand stability: A case study of Nigeria


  • Saten Kumar

    (Department of Business Economics, Auckland University of Technology)

  • Don J. Webber

    () (Department of Business Economics, Auckland University of Technology and Department of Economics, UWE, Bristol)

  • Scott Fargher

    (Department of Business Economics, Auckland University of Technology)


This paper presents an empirical investigation into the level and stability of money demand (M1) in Nigeria between 1960 and 2008. In addition to estimating the canonical specification, alternative specifications are presented that include additional variables to proxy for the cost of holding money. Results suggest that the canonical specification is well-determined, the money demand relationship went through a regime shift in 1986 which slightly improved the scale economies of money demand, and money demand is stable. These findings imply that Nigeria could effectively use the supply of money as an instrument of monetary policy.

Suggested Citation

  • Saten Kumar & Don J. Webber & Scott Fargher, 2010. "Money demand stability: A case study of Nigeria," Working Papers 1015, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
  • Handle: RePEc:uwe:wpaper:1015

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    References listed on IDEAS

    1. Nair-Reichert, Usha & Weinhold, Diana, 2001. " Causality Tests for Cross-Country Panels: A New Look at FDI and Economic Growth in Developing Countries," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(2), pages 153-171, May.
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    Cited by:

    1. Felix S. Nyumuah, 2017. "An Investigation into the Interest Elasticity of Demand for Money in Developing Countries: A Panel Data Approach," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(3), pages 69-80, March.
    2. Helmi Hamdi & Ali Said & Rashid Sbia, 2015. "Empirical Evidence on the Long-Run Money Demand Function in the Gulf Cooperation Council Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 5(2), pages 603-612.
    3. repec:eco:journ1:2017-05-39 is not listed on IDEAS

    More about this item


    Money demand; Structural breaks; Cointegration; Monetary policy;

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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