International Journal of Development and Economic Sustainability (IJDES)

EA Journals

Stability of Demand for Money Function in Nigeria

Abstract

This study examines the long-run demand for real broad money function and its stability in Nigeria for the period 1986 to 2011. The study employs Ordinary Least Squares, Augmented-Dickey Fuller and Phillips-Perron tests for unit root, Engle-Granger approach for cointegration, CUSUM and CUSUMSQ tests for stability. The results of the stability and cointegration tests confirm that a stable, long-run relationship exists between demand for real broad money aggregate and its determinants: income, domestic real interest rate, expected rate of inflation, expected foreign exchange depreciation, and foreign interest rate. Furthermore, the results show that the income elasticity and foreign interest rate coefficients are positive while the domestic real interest rate, inflation rate, and exchange rate depreciation coefficients are negative, respectively. Hence, the apex bank in Nigeria can target the broad money (M2) aggregate to achieve macroeconomic objectives

Keywords: Cointegration, Real money demand function, Stability

cc logo

This work by European American Journals is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 4.0 Unported License

 

Recent Publications

Email ID: editor.ijdes@ea-journals.org
Impact Factor: 7.72
Print ISSN: 2053-2199
Online ISSN: 2053-2202
DOI: https://doi.org/10.37745/ijdes.13

Author Guidelines
Submit Papers
Review Status

 

Scroll to Top

Don't miss any Call For Paper update from EA Journals

Fill up the form below and get notified everytime we call for new submissions for our journals.