The Effect of the Cashless Payment on Money Demand and Velocity of Money in China

The purpose of this research is to analyze the factors that influence money demand which are characterized by the amount of money currency (M1) in Indonesia, one of which is interest rates. The model of observation analysis used in this study is OLS (Ordinary Least Square), as a whole the tests performed are by linear constraint tests, statistical tests and classic assumption tests. In this model, the variable domestic interest rates in Indonesia are used as explanatory components. From these variables examined whether it influences the demand for money (the velocity of money) M1 or not.The results obtained from this study are that domestic interest rates have a negative and significant influence on the demand for money in Indonesia, these results are consistent with Keynesian theory, that interest rates increase, the demand for money for the cash balance will decrease.

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DETERMINANTS OF INDONESIA’S INCOME VELOCITY OF MONEY

Buletin Ekonomi Moneter dan Perbankan ◽

10.21098/bemp.v21i3.1006 ◽

2019 ◽

Vol 21 (3) ◽

pp. 323-342

Author(s):

Susan Sunila Sharma ◽

Ferry Syarifuddin

Keyword(s):

Interest Rates ◽

Money Demand ◽

Time Series Data ◽

Series Data ◽

Tax Revenue ◽

Short Term ◽

Policy Perspective ◽

Long Run ◽

Velocity Of Money ◽

Short Run

Using monthly time-series data and both short- and long-run models, our paper examines the determinants of Indonesia’s income velocity of money. Our findings strongly suggest that in the long-run, tax revenue, short-term interest rates, and industrial production, and in the short-run, money demand significantly determines income velocity of money. Our analysis suggests that the effect on income velocity is mostly over the long-run as most determinants are dormant in the short-run. The implication from a policy perspective is that shocks that are transitory are unlikely to burden income velocity.

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On Income Velocity of Money, Precautionary Money Demand and Growth

Journal of Economics ◽

10.1007/s00712-006-0228-0 ◽

2007 ◽

Vol 90 (2) ◽

pp. 143-166 ◽

Cited By ~ 1

Author(s):

Jana Hromcová

Keyword(s):

Money Demand ◽

Velocity Of Money ◽

Precautionary Money Demand

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A NOTE ON MONEY AND THE CONDUCT OF MONETARY POLICY

Macroeconomic Dynamics ◽

10.1017/s1365100513000187 ◽

2013 ◽

Vol 18 (8) ◽

pp. 1854-1883 ◽

Cited By ~ 5

Author(s):

Jagjit S. Chadha ◽

Luisa Corrado ◽

Sean Holly

Keyword(s):

Monetary Policy ◽

Simple Model ◽

Money Demand ◽

Aggregate Demand ◽

Policy Rules ◽

Monetary Policy Rules ◽

Policy Practice ◽

External Finance ◽

Velocity Of Money

Prior to the financial crisis, mainstream monetary policy practice had become disconnected from money. We outline the basic rationale for this development using a simple model of money and credit in which we explore the conditions under which money matters directly for the conduct of policy. Then, using a DSGE model, we examine the circumstances under which money becomes more closely linked to inflation. We find that money matters when the variance of the supply of lending dominates productivity and the velocity of money demand. This is because amplifying the role of loans supply leads to an expansion in aggregate demand, via a compression of the external finance premium, which is inflationary. We consider a number of alternative monetary policy rules, and find that a rule which exploits the joint information from money and the external finance premium performs best.

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The Problem of Identifying and Modeling the Relationship between Monetary Factor and Inflation in the Russian Economy

Voprosy Ekonomiki ◽

10.32609/0042-8736-2008-7-61-76 ◽

2008 ◽

pp. 61-76

Author(s):

A. Porshakov ◽

A. Ponomarenko

Keyword(s):

Money Supply ◽

Money Demand ◽

Russian Economy ◽

Long Run ◽

Complex Approach ◽

Wide Range ◽

Long Time ◽

The Relationship ◽

Supply Side Factors

The role of monetary factor in generating inflationary processes in Russia has stimulated various debates in social and scientific circles for a relatively long time. The authors show that identification of the specificity of relationship between money and inflation requires a complex approach based on statistical modeling and involving a wide range of indicators relevant for the price changes in the economy. As a result a model of inflation for Russia implying the decomposition of inflation dynamics into demand-side and supply-side factors is suggested. The main conclusion drawn is that during the recent years the volume of inflationary pressures in the Russian economy has been determined by the deviation of money supply from money demand, rather than by money supply alone. At the same time, monetary factor has a long-run spread over time impact on inflation.

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The Investment Climate in Russia

Voprosy Ekonomiki ◽

10.32609/0042-8736-2006-5-48-77 ◽

2006 ◽

pp. 48-77

Author(s):

Article Editorial

Keyword(s):

Money Demand ◽

State Level ◽

Decision Making Process ◽

Investment Climate ◽

Operational Environment ◽

Gdp Growth Rate ◽

External Conditions ◽

Potential Gdp ◽

The Government ◽

Economic Boom

During the last six years, exceptionally favourable external conditions for an upsurge of the domestic economy have been developed. However, they failed to result in an economic boom, which has been estimated by the authors as quite possible. One of the reasons for this - deterioration of the investment climate in the country that caused a decline of business activities and money demand decrease thus leading to reduction of potential GDP growth rate. The accumulated modernisation problems cannot be resolved without increasing the economic dynamics. But this requires an economic policy able to facilitate predictability of Russian business operational environment, to protect it legally, to secure a system of partnership relations with the government and to respect the interests of the main participants in the state level decision-making process concerning business undertakings and investment climate.

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The Demand For Money in Pakistan: Reply (Notes and Comments)

The Pakistan Development Review ◽

10.30541/v14i3pp.370-375 ◽

1975 ◽

Vol 14 (3) ◽

pp. 370-375

Author(s):

M. A. Akhtar

Keyword(s):

Interest Rates ◽

Money Demand ◽

Strong Support ◽

Physical Capital ◽

Careful Examination ◽

Demand For Money ◽

Weak Support ◽

Complementarity Hypothesis ◽

The Difference ◽

The One

I am grateful to Abe, Fry, Min, Vongvipanond, and Yu (hereafter re¬ferred to as AFMVY) [1] for obliging me to reconsider my article [2] on the demand for money in Pakistan. Upon careful examination, I find that the AFMVY results are, in parts, misleading and that, on the whole, they add very little to those provided in my study. Nevertheless, the present exercise as well as the one by AFMVY is useful in that it furnishes us with an opportunity to view some of the fundamental problems involved in an empi¬rical analysis of the demand for money function in Pakistan. Based on their elaborate critique, AFMVY reformulate the two hypo¬theses—the substitution hypothesis and the complementarity hypothesis— underlying my study and provide us with some alternative estimates of the demand for money in Pakistan. Briefly their results, like those in my study, indicate that income and interest rates are important in deter¬mining the demand for money. However, unlike my results, they also suggest that the price variable is a highly significant determinant of the money demand function. Furthermore, while I found only a weak support for the complementarity between money demand and physical capital, the results obtained by AFMVY appear to yield a strong support for that rela¬tionship.1 The difference in results is only a natural consequence of alter¬native specifications of the theory and, therefore, I propose to devote most of this reply to the criticisms raised by AFMVY and the resulting reformulation of the two mypotheses.

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