The paper is an attempt to estimate the short-run and long-run money demand functions in India for the decade of the ninety. The paper tries to closely follow the methodologies laid down in Chow (1966), Hendry (1980), Rose (1985) and Hwang (1985). The main findings of the paper are: (i) permanent income is not an appropriate epresentation of the scale variable, (ii) the positive interest elasticity of demand for money in the short-run (iii) limited ability of economic agents in removing disequilibrium of past period and (iv) rejection of the real adjustment hypothesis.
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Paper provided by University of Pretoria, Department of Economics in its series Working Papers with number
200502.
Find related papers by JEL classification: E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models