Asymmetric effects of exchange rate changes on the demand for money in Africa |
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| Authors: | Mohsen Bahmani-Oskooee Abera Gelan |
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| Institution: | 1. Department of Economics and The Center for Research on International Economics, The University of Wisconsin-Milwaukee, Milwaukee, WI, USAbahmani@uwm.edu;3. Department of Africology, University of Wisconsin-Milwaukee, Milwaukee, WI, USA |
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| Abstract: | In order to account for currency substitution, the exchange rate is included in the demand for money. More recent studies have demonstrated that exchange rate changes could have asymmetric effects on the demand for money or domestic currency. In this paper, we consider the experiences of 18 African countries and show that in most countries, indeed exchange rate changes have short-run asymmetric effects on the demand for money. However, short-run effects translate to long-run asymmetric effects only in a limited number of African countries. |
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| Keywords: | Money demand exchange rate asymmetry nonlinear ARDL Africa |
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