Asymmetric effects of world uncertainty index on the demand for money in Nigeria

The paper incorporates the world uncertainty index into conventional money demand for Nigeria. Both symmetric and asymmetric effects of world uncertainty index are estimated over the period 1986: Q1–2020: Q4. Results from the linear ARDL estimation reveal that world uncertainty has no significant ef...

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Bibliographic Details
Published in:SN Business & Economics 2024-08, Vol.4 (9), Article 96
Main Author: Akinlo, Anthony Enisan
Format: Article
Language:English
Subjects:
Business and Management
Economics
Finance
Original Article
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Summary:The paper incorporates the world uncertainty index into conventional money demand for Nigeria. Both symmetric and asymmetric effects of world uncertainty index are estimated over the period 1986: Q1–2020: Q4. Results from the linear ARDL estimation reveal that world uncertainty has no significant effect in the short and long-run. However, the asymmetric nonlinear framework confirms short-run symmetry and long-run asymmetry. This means that world uncertainty is a long run phenomenon for the Nigerian money demand function. In particular, we find that decreased uncertainty is more important than increased shocks. The results show that both linear and nonlinear models exhibit a stable demand for money in Nigeria, suggesting that monetary policy can be applied to tune the Nigerian economy.
ISSN:2662-9399
2662-9399
DOI:10.1007/s43546-024-00696-5