Does the Bank of Thailand Have the Control Over the Money Supply?

Abstract

This paper estimates the broad money multiplier for Thailand using monthly data from 1997M1 to 2017M12. It is found that there is nonlinear relationship between money supply and monetary base. An increase in monetary base causes the broad money supply to increase proportionally, and vice versa. This implies that the estimated money multiplier is stable during the period of investigation. This finding suggests that the Bank of Thailand has the ability to control the broad money supply. The finding also points to the soundness of the current monetary policy regime.