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Evidence on the demand for money function in Uganda

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  • Policy Analyst - UNICEF Zimbabwe

Abstract

The paper provides an empirical analysis of the demand for money function in Uganda. It argues that monetary policy: based on monetarist views of the dynamics of a less developed economy is, to say the least, ineffective in regulating the economy. An error correction model is used to examine the character of the demand for money – in particular if it is stable in order for traditional monetary policy to be effective. The evidence on Uganda suggests that the demand for money function is unstable and hence, monetary policy needs to be used in conjunction with other policies to achieve the goal of economic stabilisation and adjustment.

Suggested Citation

  • Policy Analyst - UNICEF Zimbabwe, 2002. "Evidence on the demand for money function in Uganda," Development and Comp Systems 0210005, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpdc:0210005
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    References listed on IDEAS

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    1. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
    2. Arestis, Philip & McCauley, Kevin & Sawyer, Malcolm, 2001. "An Alternative Stability Pact for the European Union," Cambridge Journal of Economics, Oxford University Press, vol. 25(1), pages 113-130, January.
    3. Arestis, Philip & Basu, Santonu, 2004. "Financial globalisation and regulation," Research in International Business and Finance, Elsevier, vol. 18(2), pages 129-140, June.
    4. David F. Hendry, 2013. "Econometric Modelling: The ‘Consumption Function’ In Retrospect," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(5), pages 495-522, November.
    5. Cuthbertson, Keith & Galindo, Luis, 1999. "The Demand for Money in Mexico," Manchester School, University of Manchester, vol. 67(2), pages 154-166, March.
    6. Fry, Maxwell J, 1978. "Money and Capital or Financial Deepening in Economic Development?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 10(4), pages 464-475, November.
    7. Davidson, Paul, 1972. "Money and the Real World," Economic Journal, Royal Economic Society, vol. 82(325), pages 101-115, March.
    8. Giovannini, Alberto & Turtelboom, Bart, 1993. "Currency Substitution," CEPR Discussion Papers 759, C.E.P.R. Discussion Papers.
    9. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    10. Jonson, P D & Rankin, R W, 1986. "On Some Recent Developments in Monetary Economics," The Economic Record, The Economic Society of Australia, vol. 62(178), pages 257-267, September.
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    Citations

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    Cited by:

    1. John Paul Dunne & Elizabeth Kasekende, 2018. "Financial Innovation and Money Demand: Evidence from Sub‐Saharan Africa," South African Journal of Economics, Economic Society of South Africa, vol. 86(4), pages 428-448, December.
    2. Andrew Berg & Filiz D Unsal & Rafael A Portillo, 2010. "On the Optimal Adherence to Money Targets in a New-Keynesian Framework; An Application to Low-Income Countries," IMF Working Papers 10/134, International Monetary Fund.
    3. Agya Atabani Adi & Joshua Sunday Riti, 2017. "Determination of Long and Short Run Demand for Money in the West African Monetary Zone (WAMZ) Countries: A Panel Analysis," Econometric Research in Finance, SGH Warsaw School of Economics, Collegium of Economic Analysis, vol. 2(2), pages 79-97, December.

    More about this item

    Keywords

    Error correction mechanism; demand for money; monetary policy; development policy in Uganda;

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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