Divisia monetary model of exchange rate determination: the case of Philippines

Leong, Choi‐Meng; Puah, Chin‐Hong; Ismail, Shafinar

doi:10.21003/ea.v172-02

Cited by 2 publications

(2 citation statements)

References 19 publications

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“…Eventually, the research attention has gradually shifted to investigate the monetary model using divisia money. Studies contributed to the literature in this area include, but not limit to, Sianturi et al (2017), Leong et al (2018aLeong et al ( , 2018b, Puah et al (2018), Bahmani-Oskooee et al 2019, Belongia and Ireland (2019), and Fuente et al (2019). Attention was rather less in examining MDF using ADEX as a determinant.…”

Section: Literature Reviewmentioning

confidence: 99%

Role of Advertising Expenditure as an Influential Non-traditional Regressor in Russia’s Money Demand Specification

Hiew¹,

Puah

Arip

et al. 2019

IJFR

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The term advertising refers to the strategy that affects consumer behaviour and induces higher household final consumption expenditure (HFCE), which is associated with incredibly demanding for money upon transaction usages and a reduction in search costs. The model of money demand that is stable, reliable and well defined is crucial for central banks in formulating their monetary policy to minimise the gap between the supply and demand of money. Hence, this paper examines the influence of expenditure in advertising (ADEX) towards the level of demand for money among the households in Russia. An approach known as Autoregressive distributed lag (ARDL) is opted to model the money demand function (MDF) of Russia and nine years of quarterly data from 2008 to 2016 have been used in the estimation. Empirical findings reveal that ADEX not only positively influences the Russian’s money demand in long term, its MDF also becomes more superior when the ADEX has been added. As such, this study suggests that ADEX can be taken into account as a non-traditional explanatory variable in the formulation of a stable and well-specified MDF for the case in Russia.

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Section: Literature Reviewmentioning

confidence: 99%

Role of Advertising Expenditure as an Influential Non-traditional Regressor in Russia’s Money Demand Specification

Hiew¹,

Puah

Arip

et al. 2019

IJFR

Self Cite

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“…The computation approach is more consistent with the development of financial liberalisation, in which many new monetary assets are launched with various rates of return. For instance, Divisia monetary aggregate was found significant in explaining the exchange rate (Leong et al, 2018a;Leong et al, 2018b). With the innovation in monetary aggregate computation, this provides an alternative way to estimate the money demand function for Malaysia.…”

Section: Introductionmentioning

confidence: 99%

Asymmetric effects of exchange rate changes on the demand for divisia money in Malaysia

Leong¹,

Puah²,

Lau³

et al. 2019

Journal of International Studies

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Financial liberalisation has advanced the transformation of the financial market as more interest-bearing financial derivatives are introduced. Performance of the equal-weighted monetary aggregates has been affected and therefore disrupted the stability of money demand. Effectiveness of monetary policy is a concern as stability of money demand is required for a stable velocity derivation. Thus, the aim of this study is to derive a stable money demand function by considering the type of monetary aggregate included for estimation and the missing determinants of money demand. First, the divisia monetary aggregate is employed for money demand estimation in Malaysia. Second, the exchange rate is included as a determinant of money demand by employing the nonlinear autoregressive distributed lag approach to capture the asymmetric effects from exchange rate changes. The results indicate that all the variables are bound together in the long run and the model is stable. Asymmetric effects exist in the short run for both appreciation and depreciation. Long-run asymmetric effects only hold in currency appreciation in which a substitution effect exists between

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Divisia monetary model of exchange rate determination: the case of Philippines

Cited by 2 publications

References 19 publications

Role of Advertising Expenditure as an Influential Non-traditional Regressor in Russia’s Money Demand Specification

Role of Advertising Expenditure as an Influential Non-traditional Regressor in Russia’s Money Demand Specification

Asymmetric effects of exchange rate changes on the demand for divisia money in Malaysia

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