Economics, Econometrics and Finance
6 years ago

Lesotho's Economy Shifts Towards Foreign Assets Due to Money Demand Study

International Journal of Sustainable Economy
Testing the stability of money demand function in Lesotho
Moeti Damane, Lira Peter Sekantsi, Senei Solomon Molapo

Paper Summary

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The study tested the stability of money demand in Lesotho from 1980 to 2015. They found that real GDP and exchange rate positively affect money demand, while CPI and interest rates have a negative impact. In the long run, income elasticity of money demand is greater than one, suggesting a need for more domestic financial assets.