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Estimating the demand for money in an unstable open economy : the case of the Fiji Islands

journal contribution
posted on 2008-03-01, 00:00 authored by Paresh Narayan, S Narayan
In this paper, we estimate Fiji's money demand function for the period 1971-2002 based on the bounds testing approach to cointegration, which is applicable irrespective of whether or not the underlying variables are non-stationary. We estimate models with and without a time trend and for lag lengths ranging from 1-3, but fail to find any evidence for a long-run relationship. Moreover, our structural break analysis suggests that the unstable nature of Fiji's money demand may be due to atypical events, such as coups; the implementation of policies, such as devaluations and value added tax; and the onset of trade liberalisation policies over the last two decades.

History

Journal

Economic issues

Volume

13

Issue

1

Pagination

71 - 91

Publisher

Economic Issues Education Fund

Location

[London, England]

ISSN

1363-7029

Language

eng

Publication classification

C1 Refereed article in a scholarly journal

Copyright notice

2008, Economic Issues Education Fund

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