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Monetary Uncertainty and Demand for Money in Korea

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  • Mohsen Bahmani-Oskooee

    ()
    (The Center for Research on International Economics, The Department of Economics, University of Wisconsin-Milwaukee, Milwaukee)

  • Sahar Bahmani

    ()
    (Department of Economics, University of Wisconsin-Parkside, Kenosha)

Abstract

Friedman’s volatility hypothesis asserts that increased volatility of money supply can lower the velocity of money or increase the demand for money. Previous studies have tested this hypothesis by using data from a few industrialized countries. In this paper, we estimate the demand for money in Korea after including a measure of volatility of nominal money supply. We provide support for Friedman’s hypothesis in the short run as well as in the long run.

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Bibliographic Info

Article provided by Asian Economic and Social Society in its journal Asian Economic and Financial Review.

Volume (Year): 4 (2014)
Issue (Month): 3 (March)
Pages: 317-324

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Handle: RePEc:asi:aeafrj:2014:p:317-324

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  1. Imke Brüggemann & Dieter Nautz, 1997. "Money growth volatility and the demand for money in Germany: Friedman’s volatility hypothesis revisited," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 133(3), pages 523-537, September.
  2. Arango, Sebastian & Ishaq Nadiri, M., 1981. "Demand for money in open economies," Journal of Monetary Economics, Elsevier, vol. 7(1), pages 69-83.
  3. Glauco De Vita & Khine S. Kyaw, 2008. "Determinants of capital flows to developing countries: a structural VAR analysis," Journal of Economic Studies, Emerald Group Publishing, vol. 35(4), pages 304-322, July.
  4. Shyh-Wei Chen & Tzu-Chun Chen, 2012. "Untangling the non-linear causal nexus between exchange rates and stock prices: New evidence from the OECD countries," Journal of Economic Studies, Emerald Group Publishing, vol. 39(2), pages 231-259, May.
  5. Bahmani-Oskooee Mohsen & Shin Sungwon, 2002. "Stability of the Demand for Money in Korea," International Economic Journal, Taylor & Francis Journals, vol. 16(2), pages 85-95.
  6. Koi Nyen Wong & Tuck Cheong Tang, 2008. "The effects of exchange rate variability on Malaysia's disaggregated electrical exports," Journal of Economic Studies, Emerald Group Publishing, vol. 35(2), pages 154-169, May.
  7. Sahar Bahmani, 2008. "Stability of the Demand for Money in the Middle East," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 44(1), pages 62-83, January.
  8. repec:wop:humbsf:1997-23 is not listed on IDEAS
  9. Tuck Cheong Tang, 2007. "Money demand function for Southeast Asian countries: An empirical view from expenditure components," Journal of Economic Studies, Emerald Group Publishing, vol. 34(6), pages 476-496, November.
  10. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
  11. Mohsen Bahmani-Oskooee & Abera Gelan, 2009. "How stable is the demand for money in African countries?," Journal of Economic Studies, Emerald Group Publishing, vol. 36(3), pages 216-235, September.
  12. Paresh Kumar Narayan & Seema Narayan & Biman Chand Prasad & Arti Prasad, 2007. "Export-led growth hypothesis: evidence from Papua New Guinea and Fiji," Journal of Economic Studies, Emerald Group Publishing, vol. 34(4), pages 341-351, September.
  13. James E. Payne, 2008. "Inflation and inflation uncertainty: evidence from the Caribbean region," Journal of Economic Studies, Emerald Group Publishing, vol. 35(6), pages 501-511, November.
  14. Mohsen Bahmani-Oskooee & Scott W. Hegerty, 2007. "Exchange rate volatility and trade flows: a review article," Journal of Economic Studies, Emerald Group Publishing, vol. 34(3), pages 211-255, September.
  15. Choi, Woon Gyu & Oh, Seonghwan, 2003. " A Money Demand Function with Output Uncertainty, Monetary Uncertainty, and Financial Innovations," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(5), pages 685-709, October.
  16. Bahmani-Oskooee, Mohsen & Tankui, Altin, 2008. "The black market exchange rate vs. the official rate in testing PPP: Which rate fosters the adjustment process?," Economics Letters, Elsevier, vol. 99(1), pages 40-43, April.
  17. Hassan Mohammadi & Murat Cak & Demet Cak, 2008. "Wagner's hypothesis: New evidence from Turkey using the bounds testing approach," Journal of Economic Studies, Emerald Group Publishing, vol. 35(1), pages 94-106, March.
  18. Mohsen Bahmani-Oskooee & Scott W. Hegerty, 2009. "The Effects of Exchange-Rate Volatility on Commodity Trade between the United States and Mexico," Southern Economic Journal, Southern Economic Association, vol. 75(4), pages 1019-1044, April.
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