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The money demand function in a small, open and quasi-monetary economy: the Gambia

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  • Masoud Moghaddam
  • Momodou Bah

Abstract

The open-economy money demand asserts that for its underlying theory to hold, the variables ought to be co-integrated. Co-integrated variables although nonstationary in level, can share a long-term trend that is indeed stationary. However, the open money demand model has mainly been tested in developed and developing nations. This article investigates the co-integrated open-economy money demand in the Gambia where the macro economy is a quasi-monetary system, small (relative to the world market), but very open with a floating exchange rate regime. In the co-integrated space, the Gambian money demand appears to be quite responsive to domestic income, a measure of interest rate and the real exchange rate fluctuations.

Suggested Citation

  • Masoud Moghaddam & Momodou Bah, 2008. "The money demand function in a small, open and quasi-monetary economy: the Gambia," Applied Economics, Taylor & Francis Journals, vol. 40(6), pages 731-734.
    • Handle: RePEc:taf:applec:v:40:y:2008:i:6:p:731-734
    DOI: 10.1080/00036840600749649
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    Cited by:

    1. Choi-Meng Leong & Chin-Hong Puah & Shazali Abu Mansor & Evan Lau, 2010. "Testing the Effectiveness of Monetary Policy in Malaysia Using Alternative Monetary Aggregation," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 4(3), pages 321-338, August.
    2. Nitin, Arora & Asghar, OsatiEraghi, 2016. "Does India have a stable demand for money function after reforms? A macroeconometric analysis," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 44, pages 25-37.
    3. Masudul Hasan Adil & Salman Haider & Neeraj R. Hatekar, 2020. "Empirical Assessment of Money Demand Stability Under India’s Open Economy: Non-linear ARDL Approach," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 18(4), pages 891-909, December.

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