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Asymmetric effects of world uncertainty index on the demand for money in Nigeria

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  • Anthony Enisan Akinlo

    (Obafemi Awolowo University)

Abstract

The paper incorporates the world uncertainty index into conventional money demand for Nigeria. Both symmetric and asymmetric effects of world uncertainty index are estimated over the period 1986: Q1–2020: Q4. Results from the linear ARDL estimation reveal that world uncertainty has no significant effect in the short and long-run. However, the asymmetric nonlinear framework confirms short-run symmetry and long-run asymmetry. This means that world uncertainty is a long run phenomenon for the Nigerian money demand function. In particular, we find that decreased uncertainty is more important than increased shocks. The results show that both linear and nonlinear models exhibit a stable demand for money in Nigeria, suggesting that monetary policy can be applied to tune the Nigerian economy.

Suggested Citation

  • Anthony Enisan Akinlo, 2024. "Asymmetric effects of world uncertainty index on the demand for money in Nigeria," SN Business & Economics, Springer, vol. 4(9), pages 1-18, September.
    • Handle: RePEc:spr:snbeco:v:4:y:2024:i:9:d:10.1007_s43546-024-00696-5
    DOI: 10.1007/s43546-024-00696-5
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    More about this item

    Keywords

    Demand for money; Asymmetry; Nonlinear ARDL; Uncertainty; Nigeria;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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