The Divisia monetary aggregates, demand for money stability, income, and inflation fluctuations in selected sub-Saharan Africa

The Divisia monetary aggregates, demand for money stability, income, and inflation fluctuations in selected sub-Saharan Africa

The financial sector reforms adopted in the 4 selected Sub-Saharan Africa (SSA) countries, namely Kenya, Malawi, Nigeria, and South Africa have resulted to a remarkable change in the composition of monetary aggregates making the simple sum measure of money questionable. The reforms affect the stabil...

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Main Author: El-Rasheed, Shehu
Format: Thesis
Language:eng
eng
Published: 2018
Subjects:
HB Economic Theory
Online Access:https://etd.uum.edu.my/7651/1/s900623_01.pdf
https://etd.uum.edu.my/7651/2/s900623_02.pdf
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institution Universiti Utara Malaysia
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language eng
eng
advisor Abdullah, Hussin
topic HB Economic Theory
spellingShingle HB Economic Theory
El-Rasheed, Shehu
The Divisia monetary aggregates, demand for money stability, income, and inflation fluctuations in selected sub-Saharan Africa
description The financial sector reforms adopted in the 4 selected Sub-Saharan Africa (SSA) countries, namely Kenya, Malawi, Nigeria, and South Africa have resulted to a remarkable change in the composition of monetary aggregates making the simple sum measure of money questionable. The reforms affect the stability of money demand function and create uncertainty in the macroeconomic environment leading to a slow growth and high inflation rates. This study constructs a new Divisia monetary aggregates for 4 selected SSA countries and investigate the role of monetary aggregates in the money demand stability, income and price fluctuations. Two variables; monetary uncertainty (MOU) and output uncertainty (OUU) were incorporated into the model. The study employed quarterly time series data covering 2000Q1 to 2015Q3. The ARDL and Toda Yamamoto causality methods were utilized in the analysis. The main objective of the study is to investigate the role of monetary aggregates in monetary policy decisions. The results indicate that Divisia monetary aggregates perform well in explaining the stability of money demand functions. Both MOU and OUU are quite significant in the money demand stability. The study added to the existing literature on money demand by empirically exploring the impact of the MOU and OUU on money demand stability using an alternative monetary aggregate. The results also shows a significant two-way causality between money and income, however, money and prices signifying an endogeneity in money supply. The Divisia monetary aggregates perform relatively well in explaining income and prices fluctuations. The important policy implication of this finding is that monetary targeting could be more appropriate for the 4 selected SSA countries monetary policy decisions and therefore that monetary aggregates can be used to influence the growth in income and to minimize price fluctuations.
format Thesis
qualification_name Ph.D.
qualification_level Doctorate
author El-Rasheed, Shehu
author_facet El-Rasheed, Shehu
author_sort El-Rasheed, Shehu
title The Divisia monetary aggregates, demand for money stability, income, and inflation fluctuations in selected sub-Saharan Africa
title_short The Divisia monetary aggregates, demand for money stability, income, and inflation fluctuations in selected sub-Saharan Africa
title_full The Divisia monetary aggregates, demand for money stability, income, and inflation fluctuations in selected sub-Saharan Africa
title_fullStr The Divisia monetary aggregates, demand for money stability, income, and inflation fluctuations in selected sub-Saharan Africa
title_full_unstemmed The Divisia monetary aggregates, demand for money stability, income, and inflation fluctuations in selected sub-Saharan Africa
title_sort divisia monetary aggregates, demand for money stability, income, and inflation fluctuations in selected sub-saharan africa
granting_institution Universiti Utara Malaysia
granting_department School of Economics, Finance & Banking
publishDate 2018
url https://etd.uum.edu.my/7651/1/s900623_01.pdf
https://etd.uum.edu.my/7651/2/s900623_02.pdf
_version_ 1747828249087442944
spelling my-uum-etd.76512021-08-09T06:53:22Z The Divisia monetary aggregates, demand for money stability, income, and inflation fluctuations in selected sub-Saharan Africa 2018 El-Rasheed, Shehu Abdullah, Hussin School of Economics, Finance & Banking School of Economics, Finance & Banking HB Economic Theory The financial sector reforms adopted in the 4 selected Sub-Saharan Africa (SSA) countries, namely Kenya, Malawi, Nigeria, and South Africa have resulted to a remarkable change in the composition of monetary aggregates making the simple sum measure of money questionable. The reforms affect the stability of money demand function and create uncertainty in the macroeconomic environment leading to a slow growth and high inflation rates. This study constructs a new Divisia monetary aggregates for 4 selected SSA countries and investigate the role of monetary aggregates in the money demand stability, income and price fluctuations. Two variables; monetary uncertainty (MOU) and output uncertainty (OUU) were incorporated into the model. The study employed quarterly time series data covering 2000Q1 to 2015Q3. The ARDL and Toda Yamamoto causality methods were utilized in the analysis. The main objective of the study is to investigate the role of monetary aggregates in monetary policy decisions. The results indicate that Divisia monetary aggregates perform well in explaining the stability of money demand functions. Both MOU and OUU are quite significant in the money demand stability. The study added to the existing literature on money demand by empirically exploring the impact of the MOU and OUU on money demand stability using an alternative monetary aggregate. The results also shows a significant two-way causality between money and income, however, money and prices signifying an endogeneity in money supply. The Divisia monetary aggregates perform relatively well in explaining income and prices fluctuations. The important policy implication of this finding is that monetary targeting could be more appropriate for the 4 selected SSA countries monetary policy decisions and therefore that monetary aggregates can be used to influence the growth in income and to minimize price fluctuations. 2018 Thesis https://etd.uum.edu.my/7651/ https://etd.uum.edu.my/7651/1/s900623_01.pdf text eng public https://etd.uum.edu.my/7651/2/s900623_02.pdf text eng public http://sierra.uum.edu.my/record=b1698909~S1 Ph.D. doctoral Universiti Utara Malaysia Abdullah, H., Ali, J., & Matahir, H. (2010). Re-examining the demand for money in Asean-5 countries. Asian Social Science, 6(7), 146-155. Abdullah, D. A., & Rangazas, P. C. (1988). Money and the business cycle: Another look. The Review of Economics and statistics, 70(4), 680-685. Agénor, P. R., McDermott, C. J., & Prasad, E. S. (2000). Macroeconomic fluctuations in developing countries: Some stylized facts. The World Bank Economic Review, 14(2), 251-285. Akinlo, A. 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