scholarly journals Empirical studies of the demand for money and the method of determining the money demand function in the Vietnamese economy

2014 ◽  
Vol 6 (6) ◽  
Author(s):  
Phung The Dong ◽  
Keyword(s):  
Money Demand ◽  
Demand Function ◽  
Empirical Studies ◽  
Demand For Money ◽  
Money Demand Function

scholarly journals Money Demand In South Africa Revisited: A Detailed Analysis Of Different Models

2013 ◽  
Vol 12 (4) ◽  
pp. 427
Author(s):  
Ferdinand Niyimbanira
Keyword(s):  
South Africa ◽  
Monetary Policy ◽  
South African ◽  
Money Demand ◽  
Demand Function ◽  
Theory And Practice ◽  
Empirical Literature ◽  
Future Research ◽  
Demand For Money ◽  
Money Demand Function

Many macroeconomists acknowledge the importance of behavior in a money demand relationship when formulating an efficient monetary policy. Many efforts have been made to estimate the money demand in function using many different specifications. This paper discusses South African empirical literature review of money demand. It revealed that different methods have been used to analyze the demand for money in South Africa, such as the linear function approach, the partial stock adjustment model, and the buffer stock disequilibrium money model. This study also discovered that few studies are done using co-integration and error correction methods and not all of these studies show that the money demand function in South Africa is stable. Implication for theory and practice, as well as area of future research, are also discussed in the study.

scholarly journals Monetary Anticipations and the Demand for Money: An Application for the South Asian Region

1987 ◽  
Vol 26 (4) ◽  
pp. 529-539
Author(s):  
Ather Maqsood Ahmed ◽  
Mohammad Rafiq
Keyword(s):  
Money Supply ◽  
Money Demand ◽  
Durable Goods ◽  
Demand Function ◽  
Shock Absorber ◽  
Demand For Money ◽  
Money Demand Function ◽  
Transitory Income ◽  
Consumer Durable ◽  
Definition Of

While there are a number of issues in economics which are frequently scrutinized, the most important of them probably is the determination of a stable money demand function. Other issues in this regard relate to the choice between (i) broad vs. narrow definition of money; (ii) measured vs. permanent income; (iii) short-term vs. long-term interest rate; and (iv) inclusion of a variable for inflation or expected inflation. Quite recently, a new dimension has been added to the demand for money function. It is now argued that unanticipatory changes in the nominal money supply also affect the real demand for money. Darby (1972) has proposed that unanticipatory nominal money supply behaves as a shock-absorber in the money demand function. Initially, Laidler (1980) and then Carr and Darby (1981) formulated a shock-absorber model in which they have shown empirically that unanticipatory shocks in money supply positively affect the demand for money. Inclusion of this shock variable was justified by Darby (1972) on the ground that money balances serve as a buffer stock or shock-absorber which temporarily absorbs unexpected variations in income, especially the transitory income, until an adjustment is reached in adjusting the portfolio of securities and in consumer durable goods. The shock absorber model of Carr and Darby is based on the following two hypotheses:

scholarly journals On the nexus between Stock Market Fluctuations and the Demand for Money in Saudi Arabia

2020 ◽  
Vol 10 (1) ◽  
pp. 142
Author(s):  
Moayad Al Rasasi ◽  
Fares Rawah ◽  
Bander Alghamdi
Keyword(s):  
Saudi Arabia ◽  
Interest Rate ◽  
Money Demand ◽  
Stock Prices ◽  
Demand Function ◽  
Positive Impact ◽  
Demand For Money ◽  
Money Demand Function ◽  
Long Run ◽  
Estimated Error

This research paper estimates the augmented money demand function for Saudi Arabia while incorporating stock prices as one of the key determinants and utilizing quarterly data spanning over the period of 2010-2018. The estimated money demand function coincides with theoretical expectation regarding income and interest rate over long run. In Particular, the demand for money is statistically significant and positively related with income while it’s negatively related with interest rate. On stock prices, the findings suggest that they are statistically significant and have positive impact on money demand over the long run. Moreover, the estimated error correction model indicates that it takes money demand about two quarters to adjust to its equilibrium condition.

scholarly journals THE MONEY DEMAND FUNCTIONS IN ISLAMIC ECONOMY: NEW EVIDENCE FROM IRAN-ARDL APPROACH

2019 ◽  
Vol 4 (2) ◽  
pp. 205-222
Author(s):  
Farzaneh Sadeghi ◽  
Saeed Khadivy Rofougar
Keyword(s):  
Money Demand ◽  
Demand Function ◽  
Policy Decision ◽  
Demand For Money ◽  
Money Demand Function ◽  
Time Model ◽  
Monetary Economy ◽  
Ardl Approach ◽  
Islamic Republic Of Iran ◽  
Rental Rate

The demand for money is one of the most fundamental issues of the monetary economy for policy decision. On the other hand, according to the principle of prohibition of Riba, attitudes about the money market conditions in Islamic economics, is quite different from conventional economics. Hence achieving the money demand function in an Islamic country would be necessary. Most studies about the money demand in Islamic economy used the Keynesian approach, while in modern macroeconomics, money demand function derived by using the microeconomics-based approach. Hence in this article investigate some models of the microeconomics-based approach, then, in accordance with Islamic principles, it choose the best among them that is shopping-time model. After that we derive the Islamic money demand function. The results indicate that the demand for money is the function of income and rental rates of sukuk. The marginal product of capital due to an additional unit of income spend for Infaq (spending in Allah's way), depend on the expected inflation rate, depreciation rate and rental rates of Sukuk. In this paper, apply ARDL approach to estimate the money demand function in Islamic republic of Iran in period of 1978-2008 i.e. after Islamic revolution. The results suggested that M1 and M2 money demand are co-integrated with income and rental rate of Sukuk. Incorporating CUSUM and CUSUMSQ tests into co-integration analysis, we conclude that M2 money demand is more stable than M1.

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.

scholarly journals The Demand for Money and the Term Structure of Interest Rates in Pakistan

1983 ◽  
Vol 22 (2) ◽  
pp. 97-116 ◽  
Author(s):  
Shaheena Nisar ◽  
Naheed Aslam
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Term Structure ◽  
Money Demand ◽  
Demand Function ◽  
Demand For Money ◽  
Money Demand Function ◽  
Time Deposit ◽  
Scale Variable ◽  
Simple Average

Using the term structure of interest rates, and treating measured income as a scale variable, the paper analyses the demand for money in Pakistan. It is found that replacement of simple average interest rate by the term structure of time deposit rates improves the estimates of money demand function. Money demand is found to be sensitive to changes in interest rates and income level. Furthermore, diseconomies of scale are observed in money holdings.

Permanent Income, Inflation Expectations and the Money Demand Function in Developing Countries

1982 ◽  
Vol 21 (4) ◽  
pp. 259-273 ◽  
Author(s):  
Ashfaque H. Khan
Keyword(s):  
Developing Countries ◽  
Money Demand ◽  
Demand Function ◽  
Permanent Income ◽  
Quadratic Loss ◽  
Inflation Expectations ◽  
Demand For Money ◽  
Money Demand Function ◽  
Adaptive Expectations ◽  
Expected Inflation

Using the Adaptive Expectations Model and the method of minimising quadratic loss function this paper explores the relevant scale and opportunity cost variables in the money demand function of six developing countries of Asia. It is found that substitution of permanent income for measured income and of expected inflation for actual inflation does not generally improve the estimates of money demand function. Furthermore, the demand for money is found to be sensitive to changes in interest rate for some countries.

scholarly journals The Demand for Money in Nepal: An Analysis Using Vector Error Correction Model

2019 ◽  
Vol 2 ◽  
pp. 10-17
Author(s):  
Deepak Neupane
Keyword(s):  
Interest Rate ◽  
Money Supply ◽  
Money Demand ◽  
Unit Root ◽  
Demand Function ◽  
Unit Root Test ◽  
Demand For Money ◽  
Money Demand Function ◽  
Real Gdp ◽  
Integration Test

This paper examines the demand for money in Nepal. Accordingly, time series techniques such as Unit Root Test, Co-integration test approach were conducted considering the annual data from 1975 to 2019. The results of the unit root test indicate that the variables are stationary at the first order difference. Moreover, the co-integration test state that there is co-integration among the real broad money supply, real GDP at producer price, inflation and the interest rate, after taking the logs of real broad money supply, real GDP and interest rate and taking the first difference of all the considered variables, which makes the series normal and stationary respectively. Besides the results of the CUSUM test indicate the stability of the model. The results of the VECM show that there exists the long-run causality of the determinants on the money demand function whereas, out of the considered variables, none has the short-run causality on the money demand function. Moreover, ordinary least square method was also conducted to compute the coefficient of parameters which showed that though only one, real GDP, out of three, was found to be significant, the model was found to be good fit with the value of R-squared 0.9933 stating that the 99.33 percent variation in the dependent variable is explained by the explanatory variables.

Exchange Rate Flexibility And Monetary Policy

2011 ◽  
Vol 14 (2) ◽  
pp. 69
Author(s):  
Hamid Milani
Keyword(s):  
Exchange Rate ◽  
Money Demand ◽  
Demand Function ◽  
Monetary Shocks ◽  
Industrialized Countries ◽  
Exchange Rate Flexibility ◽  
Demand For Money ◽  
Money Demand Function ◽  
Floating Rates ◽  
Insulating Properties

<span>It has been argued that floating rates protect economies from monetary shocks originated abroad and provide great autonomy and independence. Those who have tried to use the money demand function to explain insulating properties have excluded exchange rate flexibility variable in their models. This paper estimates a money demand function that includes exchange rate flexibility as another determinant of the demand for money for the major industrialized countries.</span>

scholarly journals Money Demand Balances and Exchange Rate in Pakistan: A Time Series Analysis

2020 ◽  
Vol 6 (4) ◽  
pp. 1389-1399
Author(s):  
Shazia Sana ◽  
Shahnawaz Malik ◽  
Muhammad Ramzan Sheikh ◽  
Muhammad Hanif Akhtar
Keyword(s):  
Exchange Rate ◽  
Money Demand ◽  
Demand Function ◽  
Demand For Money ◽  
Money Demand Function ◽  
Ardl Approach ◽  
Non Linear ◽  
Demand Stability ◽  
The Impact ◽  
Yearly Data

This paper investigates the impact of exchange rate on the money demand balances in Pakistan by applying linear and non-linear ARDL approach. The purpose of study is not only examining the impact of exchange rate and demand for money but also to analyze that whether demand for money in Pakistan is stable or not. For the estimation of money demand function yearly data are used from the 1972 to 2019. The findings of linear ARDL suggest that exchange rate and demand for money balances are positively related. Moreover, Non-linear ARDL exhibit that positive and negative shocks in exchange rate have mixed findings for money demand while asymmetric test shows that exchange rate has symmetric effects for money demand. Stability test suggest the stable money demand in Pakistan.

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