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Journal articles on the topic 'Money demand function'

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Published: 4 June 2021
Last updated: 17 June 2025

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1

HAMBURGER, MICHAEL J. "A STABLE MONEY DEMAND FUNCTION." Contemporary Economic Policy 5, no. 1 (1987): 34–40. http://dx.doi.org/10.1111/j.1465-7287.1987.tb00242.x.

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2

Sumner, Michael. "Leakages from the money demand function." Applied Economics 23, no. 3 (1991): 531–34. http://dx.doi.org/10.1080/00036849100000029.

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3

Harb, Nasri, and Mohammed Nur Hussain. "Money demand function in SAARC countries." International Journal of Economics and Business Research 7, no. 4 (2014): 444. http://dx.doi.org/10.1504/ijebr.2014.062907.

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4

Aşık, Bekir. "Uncertainty and Money Demand Function in Developing Countries." World Journal of Applied Economics 10, no. 2 (2024): 111–36. http://dx.doi.org/10.22440/wjae.10.2.5.

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As monetary policy authorities influence many macroeconomic variables by determining monetary aggregates, their relationships with other macroeconomic variables are critical in setting the most appropriate monetary policy rules. Identifying the variables affecting money demand and having a stable money demand function is essential for monetary policy. This paper examines the stability of the money demand function for 12 developing countries over the sample 2006.Q1-2023.Q3. We employ the Autoregressive Distributed Lag Model and the Cross-Sectionally Autoregressive Distributed Lag Model because of the different degrees of integration of the selected variables. According to the results, there is a stable long-run relation in the money demand function for selected developing countries. The uncertainty variable, which is the study’s primary objective, affects money demand negatively in the long run; it does not temporarily affect the demand for money. The findings also indicate that the real GDP (inflation) positively (negatively) impacts demand for real monetary aggregates as expected. The real interest rate measuring the opportunity cost of holding money does not significantly affect money demand. Although the effect of the exchange rate is positive in the short run, it turns negative as time passes and in the long run. This finding supports the ‘wealth effect’ in developing countries.
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5

Bhatta, Siddha Raj. "Stability of Money Demand Function in Nepal." Banking Journal 3, no. 1 (2013): 1–27. http://dx.doi.org/10.3126/bj.v3i1.7508.

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This paper examines the long-run stability issue of money demand function in Nepal using the annual data set of 1975-2009 by using the recently developed ARDL modelling to cointegration popularized by Pesaran and Shin (1999). The bounds test shows that there exists the long-run cointegrating relationship among demand for real money balances, real GDP, and interest rate in case of both narrow and broad monetary aggregates. Further, the CUSUM and CUSUMSQ test reveal that both the long-run narrow and broad money demand functions are stable. The results show that demand for money balance in Nepal is a stable and predictable function of a few variables and the central bank can rely on the monetary aggregates as intermediate targets for achieving the broad economic objectives.DOI: http://dx.doi.org/10.3126/bj.v3i1.7508 Banking Journal Vol.3(2) 2013 pp.1-27
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6

Nyumuah, Felix S. "The Impacts of Interest Rate and Exchange Rate Volatilities on the Demand for Money in Developing Economies." International Journal of Economics and Finance 10, no. 3 (2018): 56. http://dx.doi.org/10.5539/ijef.v10n3p56.

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Volatilities in the interest rate and the exchange rate cause instability in money demand functions. This study investigates the effect of interest and exchange rates volatilities on money demand in developing countries using time series data of four African countries namely, Equatorial Guinea, Gambia, Nigeria and Uganda. The model used is a conventional log linear money demand function, with money demand specified as a function of income, interest rate, inflation rate, exchange rate, interest rate volatility and exchange rate volatility. The results show that on the whole the interest rate and exchange rate volatilities do not have significant effects on money demand in developing countries. However, the money demand functions of these economies prove unstable. These findings imply that the monetary authorities should resort to inflation targeting monetary policy and employ the interest rate as the policy instrument.
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7

Vukovic, Marija, Ljiljana Miletic, and Jelena Maravic. "Estimation of money demand function for reserve money in Serbia." Industrija 44, no. 4 (2016): 141–57. http://dx.doi.org/10.5937/industrija44-11952.

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8

Al Rasasi, Moayad H. "Assessing the Stability of Money Demand Function in Saudi Arabia." International Journal of Economics and Financial Research, no. 62 (February 15, 2020): 22–28. http://dx.doi.org/10.32861/ijefr.62.22.28.

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This paper aims to investigate the stability of money demand function for Saudi Arabian economy over the period of 2007:Q1-2018:Q4 by applying various structural break tests. The obtained results from the utilized tests reveal the stability of money demand function. The estimated money demand function also shows the impact of income on money demand is consistent with theory expectations in addition to the positive impact of exchange rate and interest rate on the demand for money. Moreover, the estimated error correction model indicates that money demand needs about 5 quarters to adjust to its equilibrium path in case it deviates from the steady state condition.
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9

Adil, Masudul Hasan, Neeraj Hatekar, and Pravakar Sahoo. "The Impact of Financial Innovation on the Money Demand Function: An Empirical Verification in India." Margin: The Journal of Applied Economic Research 14, no. 1 (2020): 28–61. http://dx.doi.org/10.1177/0973801019886479.

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Traditional money demand functions are often criticized for persistent over-prediction, implausible parameter estimates, highly serially correlated errors and unstable money demand. This study argues that some of these problems may have emerged for the lack of factoring financial innovation into the money demand function. This study estimates money demand for India during the post-reform period, from 1996:Q2 to 2016:Q3. The money demand function is estimated with the linear ARDL approach to cointegration developed by Pesaran, Shin, & Smith (2001), Bounds testing approaches to the analysis of level relationships, Journal of Applied Econometrics, 16(3), 289–326, after employing various proxies for financial innovation. In conclusion, the study finds that there is a stable long-run relationship among variables, such as real money balances, and the scale and opportunity cost variables. In a nutshell, the study assesses the relative importance of financial innovation variables in the money demand equation, and finds that financial innovation plays a very significant role in the money demand specification and its stability. JEL Classification: E41, E44, E42, E52, O16, O53
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10

Tumturk, Oguz. "Stability of Money Demand Function in Turkey." Business and Economics Research Journal 8, no. 1 (2017): 35–48. http://dx.doi.org/10.20409/berj.2017126243.

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11

Cheong Tang, Tuck. "Money demand function for Southeast Asian countries." Journal of Economic Studies 34, no. 6 (2007): 476–96. http://dx.doi.org/10.1108/01443580710830952.

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12

Harb *, Nasri. "Money demand function: a heterogeneous panel application." Applied Economics Letters 11, no. 9 (2004): 551–55. http://dx.doi.org/10.1080/1350485042000225739.

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13

Elyasiani, Elyas, and Hadi Movaghari. "Money demand function with time-varying coefficients." Quarterly Review of Economics and Finance 98 (December 2024): 101914. http://dx.doi.org/10.1016/j.qref.2024.101914.

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14

Leventakis, John A., and Sophocles N. Brissimis. "INSTABILITY OF THE U.S. MONEY DEMAND FUNCTION." Journal of Economic Surveys 5, no. 2 (1991): 131–61. http://dx.doi.org/10.1111/j.1467-6419.1991.tb00130.x.

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15

Bae, Youngsoo, and Robert M. de Jong. "Money demand function estimation by nonlinear cointegration." Journal of Applied Econometrics 22, no. 4 (2007): 767–93. http://dx.doi.org/10.1002/jae.915.

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16

Budha, Birendra Bahadur. "An Empirical Analysis of Money Demand Function in Nepal." NRB Economic Review 23, no. 1 (2011): 54–70. http://dx.doi.org/10.3126/nrber.v23i1.52751.

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This paper analyzes the money demand function for Nepal during the period of the FY 1997/98 to FY 2009/10 using annual data. The empirical results imply that the cointegration tests clearly show the existence of the long-run relationship between real money balances and its determinants, output and interest rate. The vector error correction model has proved the short-run relationship between the real money balances and its determinants. Furthermore, Dynamic OLS estimation of the money demand function indicate that the sign of coefficients of the output and interest rate were found to be consistent with the assumption of the money demand theories.
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17

Nwachukwu, Udochuwu G., Nwigboji E. Egbeoma, and Friday Nkwede. "Rethinking money demand function in Nigeria using Toda-Yamamoto Approach." African Journal of Social Issues 4, no. 1 (2022): 123–49. http://dx.doi.org/10.4314/ajosi.v4i1.7.

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This study examined the demand for money in Nigeria from 1980 to 2019, employing various techniques of econometric analysis. The study was motivated to determine whether Keynes liquidity preference theory holds in Nigeria and to ascertain whether money demand function is stable in Nigeria. The Augmented Dickey Fuller (ADF) unit root test showed that the variables were stationary at different levels. The test of stability showed that the estimated parameters for the study are stable within the period under study. Thus, money demand function is stable in Nigeria. Considering a year period lag in the estimated money demand function, it was found that there was a positive relationship between money demand and real income during the period of study. It implies that increase in real income (gross domestic product) leads to increase in the demand for money, as predicted by economic theory. The real income (gross domestic product) coefficient is 0.09 which is less than unit and is consistent with the transactions and precautionary theories. However, the inflation rate both at a year and two years period lags had negative signs, and were consistent with a priori expectations. The coefficient of –0.002 and -0.001 respectively showed that the demand for money in Nigeria will decrease by about 0.2% or 0.1% when the inflation rate (at a year or two year lag) rises by 1%. The result indicated that the higher the rate of expected inflation (i.e. higher returns on the alternative assets), ceteris paribus, and the lower is the demand for money in Nigeria. Hence, people would tend to switch to other money alternatives when inflation is anticipated, because they promise higher rates of returns. In the light of the findings, it was recommended that Central Bank of Nigeria should pursue policy aimed at changing the level of income which will influence the demand for money in the same direction.
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18

Adriansyah, Henry Martin. "UANG PERSPEKTIF EKONOMI ISLAM." SHARING: JOURNAL OF ISLAMIC ECONOMICS, MANAGEMENT AND BUSINESS 2, no. 2 (2023): 41–50. http://dx.doi.org/10.31004/sharing.v2i2.19745.

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In Islamic economics, the motives that influence a person to have money are justified only for transactions and precautions. In Islam, someone having money for speculation is prohibited because money according to Islam is only a medium of exchange and a standard of value, so al-Ghazali argued that trading money with money is prohibited because it will imprison the function of money as a medium of exchange. If money can buy or be purchased with other money, then money no longer functions as a medium of exchange but as a commodity. This is prohibited in Islam. Based on his theory about the function of money as a medium of exchange, Ibn Taymiyah strongly opposed money trading because according to him this action would eliminate the function of money itself. Money in Islam is also something that has a flow concept, not a stock concept, money is always flowing, circulating in society in economic life. The conventional concept of Money Demand for Speculation (Demand for Money for Speculation). The reason for someone's demand for money based on this motive will be more in the nature of making a profit in the forex market.
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19

Sadeghi, Farzaneh, and Saeed Khadivy Rofougar. "THE MONEY DEMAND FUNCTIONS IN ISLAMIC ECONOMY: NEW EVIDENCE FROM IRAN-ARDL APPROACH." Journal of Islamic Monetary Economics and Finance 4, no. 2 (2019): 205–22. http://dx.doi.org/10.21098/jimf.v4i2.922.

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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.
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20

Kapingura, Forget Mingiri. "The Stability Of The Money Demand Function In South Africa: A VAR-Based Approach." International Business & Economics Research Journal (IBER) 13, no. 6 (2014): 1471. http://dx.doi.org/10.19030/iber.v13i6.8935.

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The study examines the stability of the money demand function from 1994 to 2012 using quarterly data. The study utilises the Johansen co-integration to analyse the long-term relationship between the money demand function and its determinants. The CUSUM and CUSUMSQ were also used to examine the stability of the South African money demand function. The co-integration test proved that there exists a long-term relationship between the money demand function and its determinants. However, the CUSUM and CUSUMSQ proved that the South African money demand was unstable from 2003 to 2007. This therefore justifies the use of the repo rate as a monetary policy tool as compared to the monetary aggregates.
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21

Godana, Solomon Senbeto. "Demand for Money and Inflation in Ethiopia." Macro Management & Public Policies 5, no. 3 (2023): 64–77. http://dx.doi.org/10.30564/mmpp.v5i3.5722.

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One of the vital components of the macroeconomic model that helps policymaking is the demand for money function. Having reliable predictions on the money demand function helps in determining the optimum growth of money supply which is vital in controlling the inflation rate in the economy and also preventing monetary disturbances from affecting real output. In order to formulate and estimate the money demand function in Ethiopia, this study used quarterly data from 2000Q3 to 2021Q2 and employed the Ordinary Least Square method and Engle-Granger two-stage procedure for empirical analysis. The empirical result from the models indicates that, in the long run, all variables (real GDP, CPI inflation, real effective exchange rate, real interest rate and lagged real money balance) are significantly affecting the demand for money in Ethiopia. Whereas, the estimated coefficients of the short-run variable show that the real effective exchange rate, CPI inflation, and lagged real money balance are the main determinants of demand for money while the real GDP and real interest rate are insignificant. Another important finding is that absolute value of the coefficient of the error correction term implies that about 54.2% of the disequilibrium in real money demand is counter-balanced by short-run adjustment in each quarter. The study suggests that in conducting monetary policy, policymakers should consider not only the behavior of income and price but also the movement of exchange rates. The study also calls for appropriate formulation and estimation of the all-encompassing demand for money function that is capable of bringing stability to the growth of money coupled with sustainable economic growth.
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22

Naser, Ruaa. "Measuring the impact of some macroeconomic variables on the stability of demand for money for the period from 2004-2021." Al Kut Journal of Economics and Administrative Sciences 16, no. 51 (2024): 681–706. http://dx.doi.org/10.29124/kjeas.1651.30.

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The overall variables directly affect the demand function, and the level of influence varies according to the type of relationship between those variables and the money demand function, which is the cornerstone of monetary theory. Indeed, Friedman believes that monetary theory is a theory of money demand in the first place, and the demand for money if Looking at it from a historical angle, interest in it began under the Cambridge School, which replaced the speed of money circulation with the speed of income circulation, and thus achieved a qualitative shift in monetary theory that occurred through its focus on the subjective aspect, that is, the demand for money. Then the research went into great depth on this topic by other economists, especially Keynes, who classified the demand for money according to the motives through which he gave exceptional importance to the interest rate in influencing money demand. Studies continued after him to reach their level with (Milton Friedman), whose contributions in this field can be said to have been represented by two aspects: the concept of stability, that is, the stability of the money demand function and the stability of the speed of circulation. The research dealt with the relationship between independent economic variables (domestic product, exchange rate, interest rate). ) and the demand function for money.
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23

Kerdpitak, Chayanan. "Demand for Money Function in Case of Philippines: An Empirical Analysis." Research in World Economy 11, no. 1 (2020): 220. http://dx.doi.org/10.5430/rwe.v11n1p220.

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An effective formulation of monetary policy provides an empirical and coherent model of money related with demand. In order for the monetary authorities to understand the demand for the purpose of money function, the steadiness of money demand is important as it leads towards an application of efficient monetary policy. In order to examine the stability of money demand function of Philippines, following study was conducted with broad money, real asset price index, GDP deflator, real GDP, long-term interest rate and short-term interest rate. For empirical investigation, unit root test, cointegration, and Granger-Causality tests were used. However, the findings of the cointegration suggests that cointegration reveals there is presence of linear combinations, and results shows that there are four cointegrating equations present. Therefore, it is evident that there are at least 4 cointegrating relations between the variables. Hence, some of macroeconomic indicators can be used to predict the broad money due to presence of vector. However, the Granger-Causality shows that no macroeconomic variable granger cause broad money (M1). Therefore, the selected macroeconomic indictors RS, LS, CPI, GDP deflator, RGDP and AP/P cannot be used to predict the variation in the broad money (M1) in case of Philippines. This means the money demand function in Philippines is not stable, and for this purpose further investigation is suggested by increasing sample size and time window in quarterly or semi-annually.
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24

Masrifah, Atika Rukminastiti, and Fajrin Intan Safitri. "THE IMPACT OF ZAKAT ON MONEY DEMAND FUNCTION: EVIDENCE FROM MUZAKKI IN INDONESIA." Jurnal Ekonomi dan Bisnis Islam (Journal of Islamic Economics and Business) 7, no. 2 (2021): 308. http://dx.doi.org/10.20473/jebis.v7i2.28670.

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Most research in the Islamic economy on the money demand have employed the Keynesian approach, while in this research money demand functions are derived from a microeconomic approach. Thus, the aim of this study is to test and analyze some of the key factors in Islamic money demand model with the microeconomics-based approach, and then, in accordance with Islamic principles, chooses muzakki as the best sample. The data source for this study is 200 muzakki in Java, with a period of 2020. Structural Equation Modelling (SEM) is adopted to examine the relationship between the seven constructs, i.e., zakat, PLS rate, state, regulation, goods and services, conspicuous consumption, and money demand. The systemic relationship between the structures indicates that the integrated model of demand for money has a strong zakat relationship, while reliability and validity have been established. Zakat plays a key role in applying the established paradigm of demand for money in relation to goods and services. Zakat significantly affects both goods and services as well as models of money demand. This proposed new model equation is intended to help each household economic actor increase the demand for philanthropic money. As many muzakki are spread throughout Indonesia, it is expected that the welfare of the poor and the low-income society will gradually improve and, finally, the distribution of income in Indonesia will be on an equal footing.
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25

Soebagiyo, Daryono. "PERANAN PENDAPATAN RIIL, TINGKAT BUNGA DAN INFLASI DALAM FUNGSI PERMINTAAN UANG." Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi dan Pembangunan 4, no. 1 (2017): 30. http://dx.doi.org/10.23917/jep.v4i1.4015.

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This writing to see problem of real income, inflation, and interest rate in money demand function. There are some perception similarities that money demand largely depends on the income or GNP (Gross National Product), besides other factors involved, like interest and inflation rates. However, to make and estimation about money demand in and economic system, it will involved some interrelated problems. (I) The definition of the most suitable money, (2) argumentation about money demand function, (3) the stability of the function statistically from period to period.The writer persons a study model from M. Semudram with OLS (Ordinary Least Square) method towards function in the form of log linear where the variable inserted is the demanded sum of nominal money, consumers price index, nominal GNP, interest rate, and inflation rate.
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26

Niyimbanira, Ferdinand. "Money Demand In South Africa Revisited: A Detailed Analysis Of Different Models." International Business & Economics Research Journal (IBER) 12, no. 4 (2013): 427. http://dx.doi.org/10.19030/iber.v12i4.7741.

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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.
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27

Mizen, Paul. "Microfoundations for a Stable Demand for Money Function." Economic Journal 107, no. 443 (1997): 1202–12. http://dx.doi.org/10.1111/j.1468-0297.1997.tb00019.x.

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28

Nair, Mahendhiran, Muthi Samudram, and Santha Vaithilingam. "Malaysian Money Demand Function Revisited: The ARDL Approach." Journal of Asia-Pacific Business 9, no. 2 (2008): 193–209. http://dx.doi.org/10.1080/10599230801981944.

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29

HAMORI, NAOKO, and SHIGEYUKI HAMORI. "Stability of the money demand function in Germany." Applied Economics Letters 6, no. 5 (1999): 329–32. http://dx.doi.org/10.1080/135048599353339.

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30

MacDonald, Ronald, and Mark P. Taylor. "A stable US money demand function, 1874–1975." Economics Letters 39, no. 2 (1992): 191–98. http://dx.doi.org/10.1016/0165-1765(92)90289-b.

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31

Lee, Chien-Chiang, and Mei-Se Chien. "Stability of money demand function revisited in China." Applied Economics 40, no. 24 (2008): 3185–97. http://dx.doi.org/10.1080/00036840600994153.

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32

Choi, Kyongwook, and Chulho Jung. "Structural changes and the US money demand function." Applied Economics 41, no. 10 (2009): 1251–57. http://dx.doi.org/10.1080/00036840601007385.

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33

Fadil, Farah. "Saudi Arabia's Money Demand Function: A Further Comment." Journal of Economic Studies 12, no. 5 (1985): 67–70. http://dx.doi.org/10.1108/eb002616.

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34

Gupta, Kanhaya L., and Bakhtiar Moazzami. "Dynamic specification and the demand for money function." Economics Letters 27, no. 3 (1988): 229–31. http://dx.doi.org/10.1016/0165-1765(88)90175-9.

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35

Mverecha, Joseph. "The Demand for Real Money Balances in Zimbabwe: An Error Correction Estimation." American Journal of Economics 8, no. 3 (2024): 36–55. http://dx.doi.org/10.47672/aje.2195.

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Purpose: The purpose of the study is to examine the stability of the money demand function in Zimbabwe. Understanding, the money demand function is a prerequisite for effective monetary policy formulation and understanding the monetary transmission process and shocks propagation in the economy. Materials and Methods: The study employs the error correction modeling methodology to investigate the money demand function for Zimbabwe using quarterly data from 2017q2 – 2023q2. The analysis is expanded to characterize the monetary transmission mechanism following a shock to the price level and how the demand for real money balances responds to both single period and multiple shocks. Findings: The findings confirm a stable long run money demand function that is subject to short run dynamics. In addition, real money demand responds positively to real GDP (Scale factor) and inversely related to the price level (inflation). Short term dynamics (particularly inflation expectations) compound real money demand collapse in response to rising inflation. Implications to Theory, Practice and Policy: Monetary Policy must aim to collapse inflation expectations through a tight monetary control program and a functioning interbank market for foreign exchange to avoid surging parallel market activity.
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36

Deviyantini, Deviyantini, Iman Sugema, and Tony Irawan. "STRUCTURAL BREAKS DAN KETIDAKSTABILAN PERMINTAAN UANG DI INDONESIA." JURNAL EKONOMI DAN KEBIJAKAN PEMBANGUNAN 6, no. 2 (2018): 47–60. http://dx.doi.org/10.29244/jekp.6.2.2017.47-60.

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This research aims to identify the sources of instability of the money demand function (M1 and M2) due to structural changes that occur as a result of economic shocks. These shocks are technically shown by the presence of structural breaks in the data and can lead the parameters non-constancy. The instability of the money demand function was analyzed using the Gregory and Hansen test. The source of instability of the money demand was identified using time varying parameter model. This research used quarterly time series data from 1993Q1 to 2013Q4. The results show that the money demand function (M1 dan M2) is not cointegrated (unstable) and the source of the instability is exchange rate variable. Keywords: Stability money demand, Structural breaks, Time varying parameter model
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37

Deviyantini, Deviyantini, Iman Sugema, and Tony Irawan. "STRUCTURAL BREAKS DAN KETIDAKSTABILAN PERMINTAAN UANG DI INDONESIA." JURNAL EKONOMI DAN KEBIJAKAN PEMBANGUNAN 6, no. 2 (2018): 47–60. http://dx.doi.org/10.29244/jekp.6.2.47-60.

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This research aims to identify the sources of instability of the money demand function (M1 and M2) due to structural changes that occur as a result of economic shocks. These shocks are technically shown by the presence of structural breaks in the data and can lead the parameters non-constancy. The instability of the money demand function was analyzed using the Gregory and Hansen test. The source of instability of the money demand was identified using time varying parameter model. This research used quarterly time series data from 1993Q1 to 2013Q4. The results show that the money demand function (M1 dan M2) is not cointegrated (unstable) and the source of the instability is exchange rate variable. Keywords: Stability money demand, Structural breaks, Time varying parameter model
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38

Kallon, Kelfala M. "The Demand for Money in Sierra Leone Revisited." Journal of African Development 11, no. 1 (2009): 41–59. http://dx.doi.org/10.5325/jafrideve.11.1.0041.

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Abstract This paper uses Johansen's cointegration methodology to estimate Sierra Leone's money long run demand function for the 1964-2005 period. It finds a stable long-run relationship between the quantity of real money balances and its determinants. Secondly, all the estimated coefficients have their expected signs. Additionally, as expected in economies with under-developed financial systems, Sierra Leone's long-run money demand function is unit income-elastic and interest-rate inelastic. Thus, the study provides support for the neoclassical money demand specification. Additionally, it reaffirms the central findings of Kallon (1992).
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39

Song, Kosal, and Siphat Lim. "A Comprehensive Investigation into the Money Demand Function in Cambodia: An Empirical Analysis." Asian Journal of Economics, Business and Accounting 23, no. 22 (2023): 358–71. http://dx.doi.org/10.9734/ajeba/2023/v23i221157.

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The objective of this study is to establish a money demand function in Cambodia. The findings obtained through the ARDL approach to cointegration indicate that real income, consumer price index, and interest rate are cointegrated with real money demand. In terms of the estimated results derived from the long-run model, it is observed that real income has a statistically significant positive impact on real money demand, while the general price level and interest rate have a negative impact. The short-run dynamic model, known as the error correction model, demonstrates that all explanatory variables collectively account for the growth rate of real money balances. In the short-run, the growth rate of real income exhibits a positive relationship with the demand for real money, whereas the inflation rate and changes in interest rate have a significant negative effect on the demand for real money balances. The estimated slope coefficient of the short-run dynamic model, which measures the speed of adjustment, is projected to be 60.67%. This outcome suggests that the real money balance model takes no more than two quarters to adjust towards long-run equilibrium in response to short-run dynamic shocks. Stability tests, such as the CUSUM and CUSUMSQ tests, indicate that the real money demand function in Cambodia remains stable in the long-term. The findings derived from this study provide empirical evidence in favor of the quantity theory of money.
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40

Mumba, Peter Nsokolo, and Emmanuel Ziramba. "An Analysis of the Money Demand Function for Zambia: A Gregory Hansen Cointegration Approach." Journal of Economics and Behavioral Studies 13, no. 1(J) (2021): 1–12. http://dx.doi.org/10.22610/jebs.v13i1(j).3050.

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The objective of this study was to analyze the money demand function for Zambia for the period 1978 – 2018 using annual time series data. The study employed the Gregory Hansen cointegration technique. The study also employed Hendry’s General to Specific technique to estimate the error correction model by obtaining a parsimonious model. The results of the Gregory Hansen test confirmed the presence of a cointegrating relationship and selected the GH-2 model as the most plausible model with a level shift and a trend. The results also endogenously determined 1994 as the break year in the money demand function. Other interesting results obtained by the study suggest that inflation and interest rate are the robust determinants of real money demand both in the short and long run. Furthermore, unlike many other developing countries, the results show that money is a necessity in Zambia. The other interesting results suggested by the study are that the financial sector reforms of 1994 diminished the demand for real money; however, the positive time trend suggests that there has been an increase in real money holdings over time in Zambia. The low-interest elasticity of money demand also potentially compromises the effectiveness of money supply as a monetary policy tool for economic stabilization. The results of the CUSUM and CUSUMSQ confirm the stability of the money demand function in Zambia.
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41

Rasasi, Moayad Al, Fares Rawah, and Bander Alghamdi. "On the nexus between Stock Market Fluctuations and the Demand for Money in Saudi Arabia." Business and Economic Research 10, no. 1 (2020): 142. http://dx.doi.org/10.5296/ber.v10i1.16231.

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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.
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42

Adil, Masudul Hasan, Neeraj Hatekar, Sana Fatima, Ibrahim Nurudeen, and Shan Mohammad. "Money Demand Function: A Not-So-Fond Farewell in the Light of Financial Development." Journal of Economic Integration 37, no. 1 (2022): 93–120. http://dx.doi.org/10.11130/jei.2022.37.1.93.

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This study investigates the stability issues of real money balances considering financial development. We estimate real narrow (M1) and broad (M3) money demand in India during the post-financial reform, from 1996:Q2 to 2016:Q3. To check the short- and long-run relationships, this study uses the autoregressive distributed lag model of cointegration and other various time series techniques. After incorporating financial development into money demand, we determined short- and long-run relationships and a well-defined open-economy stable money demand specification (M1 and M3) in India. Having established money demand function, the policymaker and central bankers can use monetary aggregates as an indicator or information variable to predict output gaps and inflationary expectations under the inflation-targeting framework.
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43

Yantini, Devi. "STRUCTURAL BREAKS DAN KETIDAKSTABILAN PERMINTAAN UANG DI INDONESIA." Jurnal Ekonomi, Akutansi dan Manajemen Nusantara 1, no. 1 (2022): 47–60. http://dx.doi.org/10.55338/jeama.v1i1.18.

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This research aims to identify the sources of instability of the money demand function (M1 and M2) due to structural changes that occur as a result of economic shocks. These shocks are technically shown by the presence of structural breaks in the data and can lead the parameters non-constancy. The instability of the money demand function was analyzed using the Gregory and Hansen test. The source of instability of the money demand was identified using time varying parameter model. This research used quarterly time series data from 1993Q1 to 2013Q4. The results show that the money demand function (M1 dan M2) is not cointegrated (unstable) and the source of the instability is exchange rate variable.
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44

Al-Shami, Salam, and Quahtan Al-Rubeiey. "Determinants of Money Supply in Light of Price Changes in Iraqi Economy: (1990 – 2014)." Journal of Global Economy 13, no. 2 (2017): 83–103. http://dx.doi.org/10.1956/jge.v13i2.458.

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This research addresses the main factors that determine Iraqi money demand for the period of 1990- 2014, in light of continuous price changes as an appropriate approach to find effective monetary policy. The research problem was crystalized in the following questions can we estimate the function of money demand in the Iraqi economy with accordance of economic theories?. An assumption stating that price changes are among the most important factors determining money demand function in Iraqi economy was adopted. It was found, using descriptive analysis of data available on economic variables that express money demand and its determinants (Non-petrol GDP, CPI, and interest rate) and the use of modern econometric techniques. And finally, after estimating money demand function of Iraqi economy, it was found that there is an important role of what is going on in price changes in money demand volume for the studied period, which confirms the hypothesis, due to exceptional conditions through which Iraqi economy went, and still suffering their consequences including wars, financial crisis, and fluctuations in petrol prices, which emphasizes the importance of conducting research and studies on money demand and its determining variables on a continuous basis to ensure the success of monetary policy in achieving its objectives.
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45

Shazia Sana, Shahnawaz Malik, Muhammad Ramzan Sheikh, and Muhammad Hanif Akhtar. "Money Demand Balances and Exchange Rate in Pakistan: A Time Series Analysis." Journal of Business and Social Review in Emerging Economies 6, no. 4 (2020): 1389–99. http://dx.doi.org/10.26710/jbsee.v6i4.1449.

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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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46

Ghumro, Niaz Hussain, and Mohd Zaini Abd Karim. "Money Demand, Exchange Rate, and Remittances in Pakistan: A Vector Autoregressive Analysis." Economic Journal of Nepal 37, no. 1-2 (2014): 1–11. https://doi.org/10.3126/ejon.v37i1-2.75139.

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This paper analyzed the relationship between money demand, exchange rate, and remittances incase of Pakistan using annual time series data for theperiod 1972- 2014. The Vector autoregressive methodology has beenemployed to study relationship by analyzing the Granger Causality, Impulse Response Function, and the Variance Decomposition. The results reveal that there is unidirectional causality from remittances to money demand and exchange rate. Based on the impulse response function, a positive shockresults in remittances increase in money demand. It shows that advent of remittances increase income of households and hence, increase inconsumption on goods and services thereby increase in money demand. The negative trend between money demand and exchange rate shows that money demand decreases with the appreciation of exchange rate. It is recommended that exchange rate, remittances and management of monetary aggregates should be tracked in the right process, so that their management can lead inthe direction of economic growth in the country.
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47

Ahmed, Ather Maqsood, and Mohammad Rafiq. "Monetary Anticipations and the Demand for Money: An Application for the South Asian Region." Pakistan Development Review 26, no. 4 (1987): 529–39. http://dx.doi.org/10.30541/v26i4pp.529-539.

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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:
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48

Milani, Hamid. "Exchange Rate Flexibility And Monetary Policy." Journal of Applied Business Research (JABR) 14, no. 2 (2011): 69. http://dx.doi.org/10.19030/jabr.v14i2.5715.

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<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>
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49

Bischoff, Charles W., and Halefom Belay. "The Problem of Identification of the Money Demand Function." Journal of Money, Credit and Banking 33, no. 2 (2001): 205. http://dx.doi.org/10.2307/2673881.

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50

Damane, Moeti, Lira P. Sekantsi, and Senei Solomon Molapo. "Testing the stability of money demand function in Lesotho." International Journal of Sustainable Economy 10, no. 4 (2018): 383. http://dx.doi.org/10.1504/ijse.2018.095274.

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