The main objective of monetary policy is price stability. For reaching this aim, most Central Bank adopt direct inflation targeting system. The principal reason is the financial markets expansion. Nevertheless, the European Central Bank (ECB) continues to base his policy on monetary aggregates. In fact, the ECB asserts the stability of his money demand function.

This paper proposes to verify this assertion with a vector error correction model in case of WAEMU given the devolpment of his financial market and the new institutionnal reform of WAEMU and CBWAS which specifies explicitly the price stability objective today.

References:

Ahumada et Garegnani (2008), Forecasting a monetary aggregate in changing environment: Argentina after 2002

Bae Y. et M. de Jong R. (2005), Money demand function estimation by non linear integration

Guene S. (2001), Agregats et politiques monetaires dans la zone euro, la documentation francaise/economie et Prevision n°147

Sanvi Avouyi-Dovi et al. (2003), Estimation d'une fonction de demande de monnaie pour la zone Euro: une synthese des resultats.

Keywords: Monetary aggregates; Vector error correction model; Inflation; WAEMU

Biography: Young woman holder of engineer diploma in Statistics and Economics obtained in ENSEA of Abidjan. She did a training course in the room of CBWAS in Dakar capital city of SENEGAL. She wrote a paper about monetary aggregates forecasting of WAEMU for inflationary risks anlysis.