Economics, Econometrics and Finance
4 years ago

South Africa's Money Supply Predictions Revolutionized by Wealth Inclusion.

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SSRN Electronic Journal
Where Has All the Money Gone? Wealth and the Demand for Money in South Africa
Stephen G. Hall, George Hondroyiannis, P. A. V. B. Swamy, George S. Tavlas

Paper Summary

The income velocity of money in South Africa started declining in 1994 after a long upward trend. Some argue this shows an unstable demand for money, but including wealth in the analysis reveals a stable demand-for-money function. This means that movements in the money supply can provide useful information about inflation in the medium-to-long term.

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