Financial Deregulation, the Demand for Money, and Monetary Policy in Australia

1989 ◽  
Vol 36 (1) ◽  
pp. 63 ◽  
Author(s):  
P. A. V. B. Swamy ◽  
George S. Tavlas
Keyword(s):  
Monetary Policy ◽  
Demand For Money ◽  
Financial Deregulation

scholarly journals FINANCIAL DEREGULATION AND DEMAND FOR MONEY IN INDONESIA

2003 ◽  
Vol 5 (1) ◽  
pp. 1-17 ◽  
Author(s):  
Iskandar Simorangkir
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Money Demand ◽  
Financial Innovation ◽  
Demand For Money ◽  
Monetary Aggregates ◽  
Financial Deregulation ◽  
Permanent Effect ◽  
Demand Stability ◽  
The Relationship

A stable money demand plays important role to conduct monetary policy as it enables a policy-driven change monetary aggregates to have predictable influences on output, interest rate and price. However, financial deregulation and financial innovation lead to break relationship between money demand, income and interest rate. This paper examines the factors underlying financial deregulation and investigates the implications of such deregulation to money demand stability in Indonesia. The findings show that the relationship between money demand and income is still stable, even though the relationship tends to be lessened. Money demand instability resulted from financial deregulation was transitory and did not have permanent effect.

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 Importance Of Money And Credit

2011 ◽  
Vol 8 (1) ◽  
Author(s):  
Michael Cosgrove ◽  
Daniel Marsh
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Federal Reserve ◽  
Rapid Growth ◽  
Credit Crisis ◽  
Short Term ◽  
Demand For Money ◽  
The Stability

The thesis of this paper is that the Federal Reserve could better achieve their goals if they paid more attention to quantity targets of both money and credit. The rapid growth in credit that ended in the credit crisis of 2007 and 2008 might have been avoided had the Federal Reserve attempted to incorporate quantitative credit measures in assessing policy. But their focus on short-term interest rates in conducting monetary policy to the exclusion of credit measures led to inaction on their part. The stability of the demand for money and credit determined by this analysis suggests the Federal Reserve could have taken policy steps early in this cycle jawboning, quantitative and regulatory to temper the credit bubble and potentially avoid the credit crisis.

scholarly journals The Demand for Simple-sum and Divisia Monetary Aggregates for Pakistan: A Cointegration Approach

1997 ◽  
Vol 36 (3) ◽  
pp. 275-291 ◽  
Author(s):  
Syed Muhammad Tariq ◽  
Kent Matthews
Keyword(s):  
Financial Innovation ◽  
Demand For Money ◽  
Monetary Aggregates ◽  
Developed Economies ◽  
Divisia Monetary Aggregates ◽  
Financial Deregulation ◽  
Sample Stability ◽  
Financial Liberalisation ◽  
Divisia Aggregates ◽  
Statistical Criteria

Financial liberalisation and the advance of financial innovation in a number of developed economies has been blamed for the break-down in the demand for money based on simple sum measures. This break-down has prompted research into Divisia measures of the demand for money. Like many developing countries, Pakistan is going through a period of financial deregulation which goes hand in hand with financial innovation due to increased competition in the banking industry. This paper employs the methodology of cointegration to compare simple-sum and Divisia level estimates of the demand for money for Pakistan for the period 1974Q4 to 1992Q4. Simple sum measures of M1 and M2 were compared with Divisia versions. The paper reports little evidence in support of the superiority of the Divisia monetary aggregates. Both types of measure produce a stable demand for money and perform satisfactorily in post-sample stability tests, although the Divisia measure appears to perform marginally better on conventional statistical criteria. However, our conclusions have to be qualified by the limitations of the data and the knowledge that the period of financial innovation and deregulation has been relatively recent. The policy significance of the results suggests that currently there is no advantage from switching from simple-sum to Divisia aggregates at the existing level of official aggregation as the proper indicator of monetary policy. However, if financial deregulation and innovation continues at the current pace, the Divisia aggregates may in future prove to be the better indicator.

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