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Africa > Madagascar, Republic of

You are looking at 1 - 3 of 3 items for :

  • Type: Journal Issue x
  • Demand for Money x
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Cover IMF Working Papers
Money Demand and Inflation in Madagascar
Koffie Ben Nassar
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.
Keywords:
WP; real GDP
Cover IMF Working Papers
Inflation Dynamics in Madagascar, 1971-2000
Mr. Emilio Sacerdoti
and
Mr. Yuan Xiao
The paper analyzes the dynamics of inflation in Madagascar in the period 1971-2000, applying cointegration analysis and error correction modeling. The empirical results, based on quarterly data, confirm that there exists a stable money demand relationship, as well as a purchasing power relationship in the long run. The former enters the short-run dynamics of inflation and money growth, while the latter affects the short-run dynamics of the exchange rate only. We also find that an appreciation has a direct negative impact on inflation and that inflation inertia is important. In addition, we conduct FIML estimation of the system and trace the impulse responses to various shocks.
Keywords:
WP; nominal exchange rate; rate of return; Madagascar; inflation; money demand; exchange rate; cointegration; error correction model; money growth; inflation inertia; inflation equation; price equation; error correction term; growth equation; Exchange rates; Exchange rate adjustments; Demand for money; Monetary base; Africa
Cover IMF Working Papers
The Macroeconomic Effects of Counterpart Funds and the Underlying Foreign Aid
Mr. Christian B. Mulder
Counterpart funds generated through foreign currency or commodity aid have again become an issue of interest, in view of the substantial buildup of these funds. Contrary to the usual approach a model is developed in this paper, which takes account of the budgetary impact, supply-side and money demand effects of counterpart funds and the underlying foreign aid. This model is used to show that counterpart funds need not have any economic impact if their creation, use, and effects are adequately monitored and understood, both by donors and by the authorities in the recipient country. The policy rules that ensure an inflation- and foreign reserves-neutral result from expected and unexpected foreign aid are derived and contrasted with a policy rule regarding unexpected foreign aid that is sometimes observed in IMF programs. A feasible alternative is developed. Various real world complications are shown not to alter the conclusions.
Keywords:
WP; money supply; counterpart funds; foreign currency; commodity aid; money supply equation; counterpart fund creation; counterpart fund spending; foreign currency aid; Monetary base; Credit; International reserves; Reserve positions; Africa