The Gambia: Demand for Broad Money and Implications for Monetary Policy Conduct

Subramanian Sriram

No 2009/192, IMF Working Papers from International Monetary Fund

Abstract: This paper evaluates the demand for broad money (M2) in The Gambia for January 1988-June 2007. There appears to be a long-run relationship for demand for real M2, but the relationship is not stable. Exogenous output shocks, financial innovation, changes in income velocity, and inadequate data quality contribute to the instability. The authorities may need to apply the monetary targeting regime flexibly in the overall objective of preserving price stability. A possible option for The Gambia is to become an inflation targeter lite.

Keywords: WP; yield; Gambia; real GDP; money demand; opportunity cost; Broad money; cointegration; error-correction; inflation targeter lite; inflation targeting; M2; monetary policy; sub-Saharan Africa; The Gambia; treasury bills yield; rate of inflation; money yield; open economy; U.S. dollar; market forces; Demand for money; Treasury bills and bonds; Inflation; Monetary base; Commercial banks; West Africa; Africa; Global (search for similar items in EconPapers)
Pages: 41
Date: 2009-09-01
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