New evidence shows key factors driving money demand in developing countries.
The article estimates the factors influencing money demand in Tunisia using data from 1979 to 2011. The study finds that the demand for money is linked to final consumption, investment expenditure, exports, and interest rates. In the short term, money demand is affected by interest rates and investment spending, while in the long term, it is mainly influenced by final consumption and interest rates. The results suggest that Tunisia's monetary policy should consider a broad definition of money and take into account different components of real income when estimating money demand functions.