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Financial Liberalization, Money Demand, and Inflation in Uganda
Author:
Mr. Jean-Claude Nachega
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Series:
IMF Working Papers
Volume/Issue:
Volume 2001: Issue 118
Language:
English
Publication Date:
01 Aug 2001
DOI:
https://doi.org/10.5089/9781451854084.001
ISBN:
9781451854084
ISSN:
1018-5941
Pages:
45
Keywords:
WP; money demand; exchange rate; treasury bill; Uganda; inflation; financial liberalization; cointegration; broad money velocity; demand function; exchange rate depreciation; velocity equation; depreciation rate; inflation process; Monetary base; Demand for money; Velocity of money; Interbank rates; Sub-Saharan Africa
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper uses cointegration analysis to investigate the empirical relationship among money, prices, income, and a vector of interest rates in Uganda from 1982 to 1998. Despite the substantial financial market liberalization that has taken place in the early 1990s, quarterly time-series data confirm that a stable relationship prevailed among real broad money, income, and domestic and foreign interest rates. The empirical results indicate income homogeneity, a strong own-rate-of-return effect, a high degree of international capital mobility and asset substitutability, and demonstrate that both domestic and foreign factors are important determinants of inflation in Uganda.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund