Investigating the Stability of Money Demand in Namibia

The stability of money demand is important for ensuring that money in the economy is predictable and is related to a set of key economic variables linking money and the real sector. This book presents a case for the stability of money demand in Namibia by employing various econometric tests. The objectives of which are three-fold. Firstly, it tries to look at the stability of both M1 and M2. Secondly, it tries to investigate further, as to which of the two measures is more stable. Thirdly, it also tries to determine the relationship between money demand and nominal variables, such as income, CPI, exchange rate and interest rate. This book provides a careful analysis on the stability of money demand and should thus shed more light on the stability of money demand in the Namibian context which is itself critical in the formulation of monetary policy for Namibia. The analysis should be useful to Central Bank professionals and Economists including those interested in issues relating to money demand.