A panel data approach to the demand for money and the effects of financial reforms in the Asian countries

Rao, B. Bhaskara; Kumar, Saten

doi:10.1016/j.econmod.2009.03.008

Cited by 55 publications

(44 citation statements)

References 16 publications

(7 reference statements)

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“…On the other hand, for Pakistan and Nepal, the relationship while positive was statistically insignificant. Rao and Kumar (2009) Vol. 9, No.…”

Section: Empirical Evidence From Developing Countriesmentioning

confidence: 99%

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An Investigation into the Interest Elasticity of Demand for Money in Developing Countries: A Panel Data Approach

Nyumuah¹

2017

IJEF

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The issue as to whether the interest rate influences the demand for money in developing countries is still controversial. The aim of this study is to attempt to resolve this controversy. The study uses panel data from eight African countries to look at the interest elasticity of demand for money in developing countries. The countries used in the study are Angola (ANG), Equatorial Guinea (EQG), Gambia (GMB), Guinea-Bissau (GBS), Kenya (KNY), Mali (MLI), Nigeria (NGR) and Uganda (UGD). Overall, the study finds the interest rate to be inelastic in the short run but elastic in the long run. This finding suggests that monetary policy is ineffective in developing countries in the long run.

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“…On the other hand, for Pakistan and Nepal, the relationship while positive was statistically insignificant. Rao and Kumar (2009) Vol. 9, No.…”

Section: Empirical Evidence From Developing Countriesmentioning

confidence: 99%

“…The literature which examines the demand for money in developing countries, using panel data techniques and incorporating modern time series methods (e.g., Harb, 2004;Carrera, 2008;Hamori, 2008;Valadkhani, 2008;Rao & Kumar, 2009), influences the conduct of this study. All the studies except Hamori (2008) were conducted for Asian countries.…”

Section: Introductionmentioning

confidence: 99%

An Investigation into the Interest Elasticity of Demand for Money in Developing Countries: A Panel Data Approach

Nyumuah¹

2017

IJEF

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“…Given this situation, the use of interest rate serves as the most appropriate monetary policy. Rao andKumar (2009, pp 1012) claimed that the use of interest rate by central banks in developing countries is inappropriate as the demand for money in their economy is stable.…”

Section: Introductionmentioning

confidence: 99%

Financial Liberalization and Long-Run Stability of Money Demand in Nigeria

Folarin

Asongu

2017

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractA stable money demand function is essential when using monetary aggregate as a monetary policy. Thus, there is need to examine the stability of the money demand function in Nigeria after the deregulation of the financial sector. To achieve this, the study employed CUSUM (cumulative sum) and CUSUMSQ (CUSUM squared) tests after using autoregressive distributive lag bounds test to determine the existence of a long run relationship between monetary aggregate and its determinant. Results of the study show that a long-run relationship holds and that the demand for money is stable in Nigeria. In addition, the inflation rate is found to be a better proxy for an opportunity variable when compared to interest rate. The main implication of the study is that interest rate is ineffective as a monetary policy instrument in Nigeria.

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“…Following the existing literature of the theories of money demand, two key factors determine money vis-à-vis an inventory to smooth variations between income and expenditure patterns and as various assets in a portfolio [9]. Hence, the general specification of the long-run money demand model that has been adopted in most emerging economies takes the following functional representation:…”

Section: Empirical Model Specificationmentioning

confidence: 99%