Monetary Economics in Developing Countries

Ghatak, Subrata; Sánchez‐Fung, José R.

doi:10.1007/978-1-137-02157-1

Cited by 16 publications

(26 citation statements)

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“…where m is the monetary base, α is a constant term, y is the log of nominal output, is the target value and v t is the velocity of monetary base. A parameter δ , indicates the speed at which deviations of output reach its target value with the policy instrument (Ghatak and Sánchez‐Fung, 2007). McCallum (1987) found that this rule would have been suitable in terms of a smoother gross national product (GNP) path after comparing simulations using this with actual policy reactions.…”

Section: Theoretical Reviewmentioning

confidence: 99%

Monetary Policy Rules for Transition Economies: An Empirical Analysis

Ghatak

Moore

2011

Review Development Economics

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In this paper, we investigate the monetary policy reaction functions for the new European Union member states. We find interesting differences when looking at both interest rates (the Taylor rule) and monetary base (the McCallum rule) as monetary policy rules. Monetary aggregate is more likely to react to the deviation of inflation from its target, while short‐term interest rates are highly sensitive to the deviation of exchange rates in the Czech Republic, Poland, Slovakia, and Slovenia. For Hungary and Romania, both interest rates and money are responsive to inflation. In empirical literature, much attention is paid to the use of the Taylor‐type rule for developed economies. However, our empirical results raise questions on the reliance of this rule for these transition economies.

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Section: Theoretical Reviewmentioning

confidence: 99%

Monetary Policy Rules for Transition Economies: An Empirical Analysis

Ghatak

Moore

2011

Review Development Economics

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“…Some authors consider the speculative demand for money as the real Keynisian invention [23]. 7 Financial assets may take the form of bills, bonds, equities, and foreign currency.…”

Section: Derivation Of the Basic Theoretical Modelmentioning

confidence: 99%

“…The demand for money in developing countries has a grey literature which is well articulated [23,[34][35][36][37][38]. An important feature of money markets of developing countries is what Myint called financial dualism [39], which implies the co-existence of heterogeneous interest rates in the organized and unorganized money markets.…”

Section: Theoretical Reviewmentioning

confidence: 99%

“…An important feature of money markets of developing countries is what Myint called financial dualism [39], which implies the co-existence of heterogeneous interest rates in the organized and unorganized money markets. A variant of this view, which concerns the imperfect nature of financial markets in developing countries, has been well formulated [23]. Imperfection in the financial markets reduces the efficiency of investment as it obstructs competition between borrowers and also increases transaction costs 9 .…”

Section: Theoretical Reviewmentioning

confidence: 99%

“…Evidence concerning the unstable income velocity in developing countries suggests that the use of the quantity theory of money to explain the demand for money may not be suitable [23]. This view provoked an investigation into the opportunity cost for holding money, and in many studies, the expected rate of inflation was observed as a major variable influencing the demand for money in developing countries [42][43][44].…”

Section: Theoretical Reviewmentioning

confidence: 99%

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The Role of Bilateral Real Exchange Rates in Demand for Real Money Balances in Cameroon

Baye¹

2011

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This paper examines the demand for real M2 in Cameroon. After providing a sketch of the development in money demand theories, the paper specifies and estimates long- and short-run demand functions for real M2 using co-integration and error correction techniques. Some emphasis is echoed on the role of bilateral real exchange rates in the demand for real balances. The paper determines the speed that the market may take to eliminate exogenous shocks on real M2. Domestic real income, foreign interest rates, degree of credit restraint and bilateral real exchange rates (BRERs) appear to significantly influence the demand for real money balances in Cameroon. BRERs have both income and substitution effects on money demand and the ultimate effect depends on the dominance of one over the other. The magnitudes of the income elasticity of the demand for money suggest that wealth holders in CFA denominated assets consider money as a normal good. Some policy implications were derived from the analysis. [JEL:E41

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Determinants of the Demand for Money in CEE Countries: Updated Evidence

Mera

Silaghi

2018

Eastern European Economics

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Monetary Economics in Developing Countries

Cited by 16 publications

References 0 publications

Monetary Policy Rules for Transition Economies: An Empirical Analysis

Monetary Policy Rules for Transition Economies: An Empirical Analysis

The Role of Bilateral Real Exchange Rates in Demand for Real Money Balances in Cameroon

Determinants of the Demand for Money in CEE Countries: Updated Evidence

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