scholarly journals The Macro-Economic Reform And The Demand For Money In India

2011 ◽  
Vol 10 (10) ◽  
pp. 61
Author(s):  
Basab Dasgupta ◽  
Rangan Gupta
Keyword(s):  
Economic Reform ◽  
Money Demand ◽  
Demand For Money ◽  
Limited Ability ◽  
Economic Agents ◽  
Demand Functions ◽  
Elasticity Of Demand ◽  
Long Run ◽  
Short Run ◽  
Scale Variable

This paper is an attempt to estimate the short-run and long-run money demand functions in India during the 90s. The paper tries to closely follow the methodologies laid down in Chow (1966), Hendry (1980), Rose (1985) and Hwang (1985). The main findings of the paper are: 1) permanent income is not an appropriate representation of the scale variable, 2) the positive interest elasticity of demand for money in the short-run, 3i) limited ability of economic agents in removing disequilibrium of past period, and 4) rejection of the real adjustment hypothesis.

scholarly journals Money Demand Function for Nepal: An Empirical View from Expenditure Component

2019 ◽  
pp. 12-25
Author(s):  
Pujan Adhikari
Keyword(s):  
Interest Rate ◽  
Money Demand ◽  
Capital Formation ◽  
Consumption Expenditure ◽  
Demand For Money ◽  
Final Consumption ◽  
On Demand ◽  
Long Run ◽  
Fixed Capital Formation ◽  
Short Run

This paper examines the long run and short-run dynamics relationship between broad money, consumption expenditure, capital stock and interest rate in Nepal over the period of 1975-2017. This paper employs ARDL bound testing approach for co-integration between the broad money demand and its determinants. Result reveals the evidence of cointegration among the variables. The empirical results show that the demand for money is affected by the interest rate and final consumption expenditure both in the long run and short-run. However, the gross fixed capital formation has no impact on demand for money in the long-run and short-run as well. On contrast, interest rate is positively associated with Broad money demand, which is not consistent with theoretically. Positive association of money demand with interest rate shows that demand for money function is instability in Nepal. Thus, this study suggests that policy maker to correct price fluctuation through the control of various expenditure components, particularly, real final consumption expenditure might be an important strategy in the long run. However, the gross fixed capital formation has no impact on demand for money in the long-run.

ECONOMIC UNCERTAINTY, MONETARY UNCERTAINTY, AND THE DEMAND FOR MONEY IN AFRICA: AN ASYMMETRY ANALYSIS

2020 ◽  
Vol 20 (02) ◽  
pp. 2050007
Author(s):  
MOHSEN BAHMANI-OSKOOEE ◽  
AUGUSTINE C. ARIZE
Keyword(s):  
Money Demand ◽  
Region Of Interest ◽  
Output Volatility ◽  
Economic Uncertainty ◽  
Demand For Money ◽  
Asymmetric Effects ◽  
Nonlinear Ardl ◽  
Uncertainty Measures ◽  
Long Run ◽  
Short Run

Economic uncertainty and monetary uncertainty are two uncertainty measures that are said to affect the demand for money in any country and our region of interest, Africa, is no exception. In this paper, we take an additional step and argue that changes in any uncertainty measure could have asymmetric effects on the money demand. After applying the linear and nonlinear ARDL approaches to each of the 13 African nations, while we find the short-run effects of both uncertainty measures to be asymmetric, long-run asymmetric effects were discovered in limited number of countries. We also discovered that monetary volatility has more long-run effects than output volatility which implies that a steady and not so erratic money growth will have its predictive impact on the African economies.

scholarly journals META-ANALYSIS OF MONEY DEMAND IN INDONESIA

2012 ◽  
Vol 15 (1) ◽  
pp. 41-62
Author(s):  
Galih Riyandi
Keyword(s):  
Money Demand ◽  
Opportunity Cost ◽  
Fixed Effects ◽  
Income Elasticity ◽  
Meta Analysis ◽  
Demand For Money ◽  
Cost Elasticity ◽  
Classification Code ◽  
Long Run ◽  
Short Run

Theory and empirical study about demand for money is the key feature in macroeconomics theory. The study about demand for money in Indonesia has been developing with various techniques. Its result in various analyses can be difficult in understanding behaviour of demand for money in Indonesia. This paper aims to find out the tendency of demand for money in Indonesia by analyzing long run and short run income elasticity and opportunity cost elasticity. We use fixed effects meta-analysis and unweighted average meta-analysis. The result shows that income elasticity and opportunity cost elasticity are consistent with theory of money demand. That result can be used as an empirical foundation to future study about demand for money in Indonesia.  Keywords: demand for money, meta analysis, fixed effects.JEL Classification code: E41, E52

scholarly journals Ethics de' Competitiveness in Finance: An Emancipative Structured Assessment and Evaluation of Indian Finance Industry

2021 ◽  
pp. 28-42
Author(s):  
Emel Siklar ◽  
Ilyas Siklar
Keyword(s):  
Money Demand ◽  
Transition Period ◽  
Cointegration Analysis ◽  
Demand Model ◽  
Demand For Money ◽  
Economic Agents ◽  
Finance Industry ◽  
Long Run ◽  
Money Holding ◽  
Macroeconomic Determinants

The details of a central bank’s monetary policy are based on assumptions about the money demand. This requires researches that aim to investigate money demand dynamics. Knowing these dynamics will support the identification of risks that may pose a threat to price stability in the long run. This study aims to analyze the changes observed in the demand for money during the last 35 years (1986-2020) in Turkey. When the analyzing period is considered as a whole in the study, it is determined that the demand for money is not stable. However, the nonlinear cointegration analysis used within the framework of soft transition models indicates that the money demand model can be divided into two different regimes with stability. In this case, it is possible to talk about the existence of a transition period in which stability is lost in the demand for money. The analyzing technique used allows the coefficients obtained for money demand to change over time according to the regime in which the economy operates. Nonlinear estimation results indicate that there is a long-term relationship between the demand for money and its macroeconomic determinants such as price level, income, interest rate, and money holding preferences of economic agents.

scholarly journals An Investigation into the Interest Elasticity of Demand for Money in Developing Countries: A Panel Data Approach

2017 ◽  
Vol 9 (3) ◽  
pp. 69 ◽  
Author(s):  
Felix S. Nyumuah
Keyword(s):  
Developing Countries ◽  
Panel Data ◽  
Interest Rate ◽  
Equatorial Guinea ◽  
African Countries ◽  
Demand For Money ◽  
Elasticity Of Demand ◽  
Long Run ◽  
Short Run ◽  
The Interest Rate

The issue as to whether the interest rate influences the demand for money in developing countries is still controversial. The aim of this study is to attempt to resolve this controversy. The study uses panel data from eight African countries to look at the interest elasticity of demand for money in developing countries. The countries used in the study are Angola (ANG), Equatorial Guinea (EQG), Gambia (GMB), Guinea-Bissau (GBS), Kenya (KNY), Mali (MLI), Nigeria (NGR) and Uganda (UGD). Overall, the study finds the interest rate to be inelastic in the short run but elastic in the long run. This finding suggests that monetary policy is ineffective in developing countries in the long run.

scholarly journals Is There a Change in the Money Demand Stability in Turkey? A Nonlinear Approach

2021 ◽  
pp. 28-42
Author(s):  
Emel Siklar ◽  
Ilyas Siklar
Keyword(s):  
Money Demand ◽  
Transition Period ◽  
Cointegration Analysis ◽  
Demand Model ◽  
Demand For Money ◽  
Economic Agents ◽  
Long Run ◽  
Money Holding ◽  
Demand Stability ◽  
Macroeconomic Determinants

The details of a central bank’s monetary policy are based on assumptions about the money demand. This requires researches that aim to investigate money demand dynamics. Knowing these dynamics will support the identification of risks that may pose a threat to price stability in the long run. This study aims to analyze the changes observed in the demand for money during the last 35 years (1986-2020) in Turkey. When the analyzing period is considered as a whole in the study, it is determined that the demand for money is not stable. However, the nonlinear cointegration analysis used within the framework of soft transition models indicates that the money demand model can be divided into two different regimes with stability. In this case, it is possible to talk about the existence of a transition period in which stability is lost in the demand for money. The analyzing technique used allows the coefficients obtained for money demand to change over time according to the regime in which the economy operates. Nonlinear estimation results indicate that there is a long-term relationship between the demand for money and its macroeconomic determinants such as price level, income, interest rate, and money holding preferences of economic agents.

scholarly journals Broad Money Demand in Mauritius with Implications for Monetary Policy

2012 ◽  
Vol 4 (8) ◽  
pp. 436-448
Author(s):  
Indranarain Ramlall
Keyword(s):  
Money Demand ◽  
Demand Function ◽  
Adjustment Coefficient ◽  
Elasticity Coefficient ◽  
Demand For Money ◽  
Money Demand Function ◽  
Long Run ◽  
Monetary Targeting ◽  
Short Run ◽  
Local Stock

This paper employs ECM approach to investigate the long run and short-run components of the broad money demand function in Mauritius for the period spanning from 2000 to 2009. To the author’s best knowledge, no study has been undertaken over broad money in Mauritius since 1992, with an update being long overdue. Results show that M2 is positively elastic with respect to GDP, with the elasticity coefficient revolving around 2.80%, clearly showing that Mauritius is not endowed with a fully developed financial system with monetization moving faster than output. The low adjustment coefficient for VECM furthers substantiates the fact that there is indeed a lack of alternative assets to M2 and above all fully justifies the transition from monetary targeting to interest rate targeting. Evidence is found in favor of foreign asset substitution but only through the exchange rate channel. Findings further show that the local stock market does not act as a substitute to local money holdings. Overall, the study points out a rather stable demand for money function in Mauritius so that the monetary authority can contemplate using it as a complementary tool but chiefly for long-run policy assessments.

Policy Uncertainty and the Demand for Money in Canada: A Nonlinear Approach

2018 ◽  
Vol 64 (4) ◽  
pp. 279-295 ◽  
Author(s):  
Mohsen Bahmani-Oskooee ◽  
Majid Maki Nayeri
Keyword(s):  
Money Demand ◽  
Policy Uncertainty ◽  
Demand For Money ◽  
The Public ◽  
Nonlinear Ardl ◽  
Nonlinear Approach ◽  
Long Run ◽  
Clear Sign ◽  
Negative Effect ◽  
Short Run

Abstract Economic uncertainty is said to affect the demand for money in either direction. We use the new comprehensive measure of policy uncertainty and assess its impact on the demand for money in Canada. When a linear model was used, we found only short-run effects of uncertainty on Canadian cash holdings. However, when a nonlinear model was used, the results revealed that increased policy uncertainty has negative effect on the demand for money in the long run but decreased uncertainty has no effect, a clear sign of an asymmetric response by the public. JEL classifications: E41 Keywords: Canada, Money Demand, Policy Uncertainty, Asymmetry, Nonlinear ARDL

scholarly journals Investigating the Stability of Money Demand in Ghana

2016 ◽  
Vol 64 (6) ◽  
pp. 2075-2079
Author(s):  
Dennis Nchor ◽  
Václav Adamec
Keyword(s):  
Error Correction ◽  
Money Demand ◽  
Structural Breaks ◽  
Correction Term ◽  
Demand For Money ◽  
Long Run ◽  
Short Run ◽  
The Interest Rate ◽  
The Stability ◽  
Cusum Tests

The study examined the demand for broad money and its stability in Ghana. Johansen’s cointegration approach reveals that the variables were non stationary and cointegrated, therefore, an error correction model, ECM was used to determine the factors that influence real money aggregate in Ghana from 1990 to 2014. The study estimated the results using two set of variables for real demand for money: M1 and M2+. This was done given the assumption that the demand for money was equal to the supply of money. The results show that, GDP affects the level of demand for money in the long run while the interest rate affects it in the short run. The error correction term in each of the cases shows that, 18 % of deviations in the real demand for money is corrected annually. The CUSUM tests of parameter stability showed that, the money demand function was stable over the period and the Chow test indicated that there were no structural breaks.

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