IDEAS home Printed from https://ideas.repec.org/a/pid/journl/v21y1982i4p259-273.html
   My bibliography  Save this article

Pennanent Income, Inflation Expectations and the Money Demand Function in Developing Countries

Author

Listed:
  • ASHFAQUE H. KHAN

    (Pakistan Institute of Development Economics,Islamabad)

Abstract

Using the Adaptive Expectations Model and the method of minimising quadratic loss function this paper explores the relevant scale and opportunity cost variables in the money demand function of six developing countries of Asia. It is found that substitution of permanent income for measured income and of expected inflation for actual inflation does not generally improve the estimates of money demand function. Furthermore, the demand for money is found to be sensitive to changes in interest rate for some countries.

Suggested Citation

  • Ashfaque H. Khan, 1982. "Pennanent Income, Inflation Expectations and the Money Demand Function in Developing Countries," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 21(4), pages 259-273.
    • Handle: RePEc:pid:journl:v:21:y:1982:i:4:p:259-273
    as

    Download full text from publisher

    File URL: http://www.pide.org.pk/pdf/PDR/1982/Volume4/259-273.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fry, Maxwell J., 1978. "The permanent income hypothesis in underdeveloped economies: : Additional evidence," Journal of Development Economics, Elsevier, vol. 5(4), pages 399-402, December.
    2. AsHFAQUE H. KHAN, 1980. "The Demand for Money in Pakistan. Some Further Results," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 19(1), pages 25-50.
    3. Laumas, Gurcharan S. & Laumas, Prem S., 1976. "The permanent income hypothesis in an underdeveloped economy," Journal of Development Economics, Elsevier, vol. 3(3), pages 289-297, September.
    4. Nugent, Jeffrey B. & Glezakos, Constantine, 1979. "A model of inflation and expectations in Latin America," Journal of Development Economics, Elsevier, vol. 6(3), pages 431-446, August.
    5. Toyoda, Toshihisa, 1972. "Price Expectations an the Short-Run and Long-Run Phillips Curves in Japan, 1956-1968," The Review of Economics and Statistics, MIT Press, vol. 54(3), pages 267-274, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Faiz Bilquees, 1988. "Inflation in Pakistan: Empirical Evidence on the Monetarist and Structuralist Hypotheses," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 27(2), pages 109-129.
    2. Charles O. Manasseh & Ifeoma C. Nwakoby & Felicia C. Abada & Felix C. Alio & Ogochukwu Okanya, 2021. "Money Demand in Nigeria: Application of Autoregressive Distributed Lag Approach," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 11(4), pages 308-321, April.
    3. PREM S. LAUMAS & MARTIN WILLlAMS, 1983. "Household Demand for Money in an Underdeveloped Economy. A Case Study of India," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 22(1), pages 37-46.
    4. Kia, Amir, 2006. "Deficits, debt financing, monetary policy and inflation in developing countries: Internal or external factors?: Evidence from Iran," Journal of Asian Economics, Elsevier, vol. 17(5), pages 879-903, November.
    5. Sung Y. Kwack, 1974. "Price linkage in an interdependent world economy: price responses to exchange rate and activity changes," International Finance Discussion Papers 56, Board of Governors of the Federal Reserve System (U.S.).
    6. Sung Y. Kwack, 1973. "The effects of foreign inflation on domestic prices and the relative price advantage of exchange rate changes," International Finance Discussion Papers 35, Board of Governors of the Federal Reserve System (U.S.).
    7. James Boughton, 1992. "International comparisons of money demand," Open Economies Review, Springer, vol. 3(3), pages 323-343, October.
    8. Mohsen Bahmani-Oskooee & Dan Xi, 2014. "Economic Uncertainty, Monetary Uncertainty, and the Demand for Money: Evidence From Asian Countries," Australian Economic Papers, Wiley Blackwell, vol. 53(1-2), pages 16-28, June.
    9. Abbas Pourgerami & Salman Saif Ghouri, 1991. "Effect of Interest Rate on Consumption under Alternative Expectations Hypotheses: Evidence from Pakistan," The American Economist, Sage Publications, vol. 35(2), pages 25-31, October.
    10. Adnan Haider & Asad Jan & Kalim Hyder, 2013. "On the (Ir)Relevance of Monetary Aggregate Targeting in Pakistan: An Eclectic View," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 18(2), pages 65-119, July-Dec.
    11. Khalfaoui, Rabeh & Padhan, Hemachandra & Tiwari, Aviral Kumar & Hammoudeh, Shawkat, 2020. "Understanding the time-frequency dynamics of money demand, oil prices and macroeconomic variables: The case of India," Resources Policy, Elsevier, vol. 68(C).
    12. Ather Maqsood Ahmed & Muhammad Rafiq & M. Shahid Iqbal, 1993. "Dynamic Properties of an Aggregate Econometric Model of Pakistan's Economy," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 32(4), pages 1031-1041.
    13. Mohsen Bahmani-Oskooee & Hafez Rehman, 2005. "Stability of the money demand function in Asian developing countries," Applied Economics, Taylor & Francis Journals, vol. 37(7), pages 773-792.
    14. Cooray, Arusha, 2008. "A Model of Inflation for Sri Lanka," Review of Applied Economics, Lincoln University, Department of Financial and Business Systems, vol. 4(1-2), pages 1-10.
    15. Louis A. Kasekende & Michael Atingi-Ego, 1999. "Impact of liberalization on key markets in sub-Saharan Africa: the case of Uganda," Journal of International Development, John Wiley & Sons, Ltd., vol. 11(3), pages 411-436.
    16. Sung Y. Kwack, 1977. "Price Linkage in an Interdependent World Economy: Price Responses to Exchange Rate and Activity Changes," NBER Chapters, in: Analysis of Inflation: 1965–1974, pages 447-484, National Bureau of Economic Research, Inc.
    17. SHAHEENA NISAR & NAHEED AsLAM, 1983. "The Demand for Money and the Term Structure of Interest Rates in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 22(2), pages 97-116.
    18. Hiroshi Fujiki & Howard J. Wall, 2006. "Controlling for geographic dispersion when estimating the Japanese Phillips curve," Working Papers 2006-057, Federal Reserve Bank of St. Louis.
    19. Siffat Mushtaq & Abdul Rashid & Abdul Qayyum, 2012. "On the Welfare Cost of Inflation: The Case of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 51(1), pages 61-96.
    20. Ghura, Dhaneshwar, 1995. "Effects of macroeconomic policies on income growth, inflation, and output growth in Sub-Saharan Africa," Journal of Policy Modeling, Elsevier, vol. 17(4), pages 367-395, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pid:journl:v:21:y:1982:i:4:p:259-273. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Khurram Iqbal (email available below). General contact details of provider: https://edirc.repec.org/data/pideipk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.