The Demand for Money in A Small Island Economy : The Case of Barbados
AbstractThis study estimates the demand for real money balances in Barbados for the period 1973 - 1998. The paper employs a cointegration and error correction modelling (ECM) approach. The results show that the demand for real money is a function of real income, inflation and the error correction mechanism. This means that real money balance holders restore these balances to the long-run relationship whenever they are in a short-run disequilibrium position. Inflation is exogenous in the money demand function. The policy implication of this finding is that the monetary authorities cannot control the inflation rate in a demand-centered money market.
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Bibliographic InfoArticle provided by Department of Economics, Delhi School of Economics in its journal Indian Economic Review.
Volume (Year): 37 (2002)
Issue (Month): 2 (July)
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Find related papers by JEL classification:
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
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