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Reassessing The Stability of Broad Money Demand in Malaysia

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  • Muhd-Zulkhibri Abdul Majid

    (Central Bank of Malaysia)

Abstract

This 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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Bibliographic Info

Paper provided by EconWPA in its series Macroeconomics with number 0405020.

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Length: 30 pages
Date of creation: 19 May 2004
Date of revision:
Handle: RePEc:wpa:wuwpma:0405020

Note: Type of Document - pdf; pages: 30
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Web page: http://128.118.178.162

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Keywords: money demand; cointegration; error-correction; Malaysia;

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  1. Mansor Ibrhim, 2001. "Financial Factors and the Empirical Behavior of Money Demand: A Case Study of Malaysia," International Economic Journal, Taylor & Francis Journals, vol. 15(3), pages 55-72.
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Cited by:
  1. Ahmad, Mahyudin, 2008. "The effect of financial deregulation on money demand in Malaysia," MPRA Paper 42295, University Library of Munich, Germany.

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