Reassessing The Stability of Broad Money Demand in Malaysia
AbstractThis paper re-examines the money demand in Malaysia covering the period from 1974 to 2001, a period characterised by various events particularly the financial sector liberalisation, changes in monetary framework and currency crises. Our results support the existence of fairly stable long-run money demand function despite the various changes and developments in the economy. However, there is an evidence of instability in short-run money demand. On this ground, the monetary targeting framework in Malaysia seems to be appropriate at least in the 1990s and monetary aggregate continue to be a useful longer-term indicator in the formulation of monetary policy.
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Length: 30 pages
Date of creation: 19 May 2004
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money demand; cointegration; error-correction; Malaysia;
Find related papers by JEL classification:
- E - Macroeconomics and Monetary Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-05-26 (All new papers)
- NEP-IFN-2004-05-26 (International Finance)
- NEP-MON-2004-05-26 (Monetary Economics)
- NEP-SEA-2004-05-26 (South East Asia)
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