Economic and Financial Review


Central Bank of Nigeria, Research Department


Demand, Money, Debt-Constrained Economy, Economy, Demand for Money, Monetary Policy, Gross Domestic Products, Gross National Products, Debt Service, Debt Service Ratio


Studies in Nigeria on the demand for money had often centred around finding a stable function using variables such as income, interest rate, inflation, exchange rate or foreign interest rate. This study considers the impact of debt (external sector variable) on demand for money. In particular, the debt service ratio has been shown empirically to influence demand for money. The model, estimated with debt service taken into account, was found to be very stable. Hence, on the basis of this empirical finding, it is recommended that debt-service be considered an appropriate policy tool of monetary control. The two measures of exchange rate, parallel and official, showed no significant difference in the two models the study relied on, but model 1 was found to encompass model 2.





Recommended Citation

Essien, E.A, Onwioduokit, E.A and Osho, E.T, (1996). Demand for money in a debt-constrained economy: a case study of Nigeria. Economic and Financial Review, 34(2), 579-605



To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.