Money Demand and Inflation in Madagascar

This paper uses a two-sector model to estimate the relationship between prices, money, and the exchange rate in Madagascar during the period 1982-2004. The estimated model, using quarterly data, finds a stable long-run relationship among monetary aggregates, domestic prices, real income, and foreign...

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Bibliographic Details
Main Author: Ben Nassar, Koffie
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2005
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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651 4 |a Madagascar, Republic of 
653 |a Price Level 
653 |a Exchange rates 
653 |a Monetary economics 
653 |a Prices 
653 |a Inflation 
653 |a Currency 
653 |a Macroeconomics 
653 |a Monetary base 
653 |a Money and Monetary Policy 
653 |a Money supply 
653 |a Foreign Exchange 
653 |a Monetary Policy, Central Banking, and the Supply of Money and Credit: General 
653 |a Deflation 
653 |a Money 
653 |a Demand for money 
653 |a Exchange rate arrangements 
653 |a Foreign exchange 
653 |a Demand for Money 
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520 |a This paper uses a two-sector model to estimate the relationship between prices, money, and the exchange rate in Madagascar during the period 1982-2004. The estimated model, using quarterly data, finds a stable long-run relationship among monetary aggregates, domestic prices, real income, and foreign interest rates. In addition, the error-correction model shows that changes in the monetary aggregates, the exchange rate, and foreign interest rates exert a significant impact on inflation. The results also suggest that a disequilibrium in the money market has a lasting impact on inflation. The paper concludes with policy recommendations