Divisia monetary aggregates and money demand for Malaysia

Dahalan, Jauhari; Sharma, Subhash C.; Sylwester, Kevin

doi:10.1016/j.asieco.2004.11.016

Cited by 14 publications

(20 citation statements)

References 29 publications

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“…Swofford and Whitney (1991) emphasis that Divisia monetary aggregates forecast better the evolution of inflation within the period 1970-1985 in USA. The empirical superiority of Divisia monetary aggregates is also found by Schunk (2001), Dahalan et al (2005), Darrat et al (2005).…”

Section: Divisia Versus Simple Sum Monetary Aggregates: a Review Of Ementioning

confidence: 54%

“…A review of the literature shows that there is no convergence in the findings. In fact, some studies confirm the empirical superiority of Divisia monetary aggregates on the traditional ones in the implementation of monetary policy (Schunk, 2001;Dahalan et al, 2005;Darrat et al, 2005). For Drake and Mills (2005), the superiority of Divisia monetary aggregates on empirical ground is not always established.…”

Section: Introductionmentioning

confidence: 84%

“…As explained by Barnett et al (1992), it is included to establish a nonmonetary alternative. Empirically, the interest rate which has the higher return will be taken as the benchmark rate (Dahalan et al, 2005). This is justified by the fact that in theory, the benchmark rate offers the highest return (Serletis and Molik, 2000).…”

Section: Research In Applied Economicsmentioning

confidence: 99%

“…In this sense, demand deposit can bear an implicit interest rate. Then, to set the user cost of demand deposits, we follow Dahalan et al (2005). They use the implicit rate of return defined by Klein (1974) which claims that banks indirectly pay a competitive rate of return to their depositors.…”

Section: Research In Applied Economicsmentioning

confidence: 99%

“…However, these studies are limited to developed countries, although Habibullah (1999) and Dahalan et al (2005) create Divisia monetary aggregates in some Asian countries. There is lack of studies concerning African countries.…”

Section: Introductionmentioning

confidence: 99%

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Empirical Performance of Monetary Aggregates in BEAC and BCEAO

Ndjokou¹

2013

RAE

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The aim of this study is to compare empirical performance of traditional as well as Divisia monetary aggregates. This evidence comes from the comparison of their relative performance in terms of real GDP and inflation within 1992.1 and 2007.4. For this purpose, the study uses in-sample and out-of-sample approaches. The in-sample approach focuses on variance decomposition analysis. Concerning out-of-sample analysis, a forecasting model is estimated through 2003:4 and forecast are generated for the period 2004:1-2007:4. The study leads to the following results. Inflation and real GDP are better explained respectively by Divisia M2 and simple sum M2 in BEAC. In BCEAO, the contribution of each monetary aggregate to the fluctuations of inflation and real GDP is very worst except simple sum M2 in explaining price level. Considering the forecasting ability, it appears that at the narrowest level of aggregation, there is no difference between the two types of monetary aggregates in the two Central Banks. At the broader level, Divisia M2 has a slight edge over traditional M2 in predicting real GDP in BEAC. In BCEAO, simple sum M2 dominates Divisia M2 in explaining inflation. JEL Classification: B22 C32 C43 C53 E52

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