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The Effect of Stock Prices on Demand for Money: The Case of Kenya
Tanzania Economic Review
View Archive Info| Field | Value | |
| Title |
The Effect of Stock Prices on Demand for Money: The Case of Kenya
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| Creator |
Mwanzia, Joseph K; University of Dar es Salaam
Ndanshau, Michael O. A; University of Dar es Salaam Luvanda, Eliab; University of Dar es Salaam |
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| Description |
This study sought to investigate empirically the effect of stock market prices on thelong-run demand for real money balances in Kenya. Modern time series econometricmethods of co-integration and error correction modelling (ECM) were used to fitquarterly time series data for the period 1996:I–2011:II. The analysis established theexistence of a positive effect of stock market prices on the demand for real moneybalances in Kenya during the sample period. Among others, the findings suggested thewealth effect from stock prices dominated the substitution effect in demand for moneyin Kenya during the sample period. The arising monetary policy implication is one:control for the wealth effect from stock market was important for stable money demandfunction that would make monetary policy effective in Kenya. Nevertheless, moreresearch is required, including also on the effect of money supply on stock prices.Keywords: Stock market, demand for money, wealth effect, income effect, co-integration,Kenya
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| Publisher |
Dar es Salaam University Press
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| Contributor |
—
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| Date |
2017-10-24
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| Type |
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion Peer-reviewed Article |
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| Format |
application/pdf
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| Identifier |
https://journals.udsm.ac.tz/index.php/ter/article/view/1046
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| Source |
Tanzania Economic Review; Vol 5, No 1-2 (2015): TER
2507-7740 0856-3373 |
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| Language |
eng
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| Relation |
https://journals.udsm.ac.tz/index.php/ter/article/view/1046/972
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| Rights |
Copyright (c) 2017 Tanzania Economic Review
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