The Role of Advertising Expenditure in Measuring Indonesia’s Money Demand Function
AbstractUsing the consumer theory approach as suggested by Habibullah (2009), this study aims to shed new light on monetary authority by incorporating advertising expenditure, a variable that has been neglected in the past, into study of the money demand function in Indonesia. In addition, different measurements of monetary aggregates (simple-sum and Divisia money) have been used in the estimation to provide better insight into the selection of a suitable monetary policy variable for the case of Indonesia. Empirical findings from the error-correction model (ECM) indicate that the advertising expenditure variable has a significant impact on the demand for money. Furthermore, as compared to simple-sum money, the model that used Divisia monetary aggregates rendered more plausible estimation results in the estimation of money demand function.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 50223.
Date of creation: 2013
Date of revision:
Advertising Expenditure; Divisia Money; Money Demand;
Find related papers by JEL classification:
- C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
- M37 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Advertising
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-10-02 (All new papers)
- NEP-MAC-2013-10-02 (Macroeconomics)
- NEP-MKT-2013-10-02 (Marketing)
- NEP-MON-2013-10-02 (Monetary Economics)
- NEP-SEA-2013-10-02 (South East Asia)
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