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Atlantic Economic Journal

, Volume 13, Issue 1, pp 27–35 | Cite as

A re-examination of the demand for money in Nigeria

  • Augustine C. Arize
  • Elizabeth J. Lott
Articles

Summary and Conclusion

This paper reexamines the demand for money in Nigeria and finds the real income and the expected rate of inflation to be important independent variables that explain over 80 percent of the variation in the real cash balance. The study shows that, in view of the low per capita income of Nigerians, permanent income and measure income are largely the same.

An important finding of this study is that, because their price level is (in large part) exogenously determined, the monetary authorities in Nigeria should be more desirous of following the constant growth rate rule. A very substantial part of the country's export (that is, oil) is especially prone to inflationary pressures due to the ease with which international inflation can be transmitted. Since the authorities can control money stock, this ‘rule’ is indicated from both the theoretical and the empirical standpoint.

Keywords

Public Finance Capita Income Price Level Substantial Part Real Income 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Atlantic Economic Society 1985

Authors and Affiliations

  • Augustine C. Arize
    • 1
  • Elizabeth J. Lott
    • 1
  1. 1.North Texas State UniversityUSA

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