Stability of Money Demand Function in Pakistan
The role, which money demand function plays in monetary policy formulation has attracted a lot of research studies to analyze this macroeconomic phenomenon. In the wake of current global and local economic and political upheavals, it is imperative to revisit the stability of money demand function. T...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
University of Ljubljana
2013-09-01
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| Series: | Economic and Business Review |
| Online Access: | http://www.ebrjournal.net/ojs/index.php/ebr/article/view/215/pdf |
| _version_ | 1819349499559018496 |
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| author | Haroon Sarwar Masood Sarwar Muhammad Waqas |
| author_facet | Haroon Sarwar Masood Sarwar Muhammad Waqas |
| author_sort | Haroon Sarwar |
| collection | DOAJ |
| description | The role, which money demand function plays in monetary policy formulation has attracted a lot of research studies to analyze this macroeconomic phenomenon. In the wake of current global and local economic and political upheavals, it is imperative to revisit the stability of money demand function. The study used the time series data and applied latest econometric techniques to find out the long run and short run money demand relationship. Moreover, all the three official monetary aggregates were used for finding out the most stable monetary demand relationship, which could provide correct signals for monetary policy formulation. The study found that broader monetary aggregate (M2) was the proper aggregate, which provided stable money demand function for Pakistan. The real GDP was positively related to the demand for real balances, while opportunity cost of money was negatively related. The study found that the role of financial innovation, in explaining the demand for money warrants attention in formulating monetary policy. |
| first_indexed | 2024-12-24T19:01:30Z |
| format | Article |
| id | doaj.art-0c72bd6551394043bb379c819a222917 |
| institution | Directory Open Access Journal |
| issn | 1580-0466 2335-4216 |
| language | English |
| last_indexed | 2024-12-24T19:01:30Z |
| publishDate | 2013-09-01 |
| publisher | University of Ljubljana |
| record_format | Article |
| series | Economic and Business Review |
| spelling | doaj.art-0c72bd6551394043bb379c819a2229172022-12-21T16:43:12ZengUniversity of LjubljanaEconomic and Business Review1580-04662335-42162013-09-01153197212Stability of Money Demand Function in PakistanHaroon SarwarMasood SarwarMuhammad WaqasThe role, which money demand function plays in monetary policy formulation has attracted a lot of research studies to analyze this macroeconomic phenomenon. In the wake of current global and local economic and political upheavals, it is imperative to revisit the stability of money demand function. The study used the time series data and applied latest econometric techniques to find out the long run and short run money demand relationship. Moreover, all the three official monetary aggregates were used for finding out the most stable monetary demand relationship, which could provide correct signals for monetary policy formulation. The study found that broader monetary aggregate (M2) was the proper aggregate, which provided stable money demand function for Pakistan. The real GDP was positively related to the demand for real balances, while opportunity cost of money was negatively related. The study found that the role of financial innovation, in explaining the demand for money warrants attention in formulating monetary policy.http://www.ebrjournal.net/ojs/index.php/ebr/article/view/215/pdf |
| spellingShingle | Haroon Sarwar Masood Sarwar Muhammad Waqas Stability of Money Demand Function in Pakistan Economic and Business Review |
| title | Stability of Money Demand Function in Pakistan |
| title_full | Stability of Money Demand Function in Pakistan |
| title_fullStr | Stability of Money Demand Function in Pakistan |
| title_full_unstemmed | Stability of Money Demand Function in Pakistan |
| title_short | Stability of Money Demand Function in Pakistan |
| title_sort | stability of money demand function in pakistan |
| url | http://www.ebrjournal.net/ojs/index.php/ebr/article/view/215/pdf |
| work_keys_str_mv | AT haroonsarwar stabilityofmoneydemandfunctioninpakistan AT masoodsarwar stabilityofmoneydemandfunctioninpakistan AT muhammadwaqas stabilityofmoneydemandfunctioninpakistan |