Mobile money and macroeconomic outcomes in East Africa

Abstract

This study examined the outcomes of mobile money use on money supply, inflation and national output. Data was taken from East African countries that have adopted mobile money services, namely Kenya, Tanzania, Uganda and Rwanda. A Panel Vector Autoregression was fitted to the data, and subsequently a Forecast Error Variance Decomposition and Orthogonalized Impulse Response Function were generated to examine the dynamics between the variables. The findings indicate that mobile money transactions have modest negative effects on inflation and money supply in the medium-term. Indicating that mobile money substitutes for the transactional function of money to some extent, and enhances output and efficiency of production.