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Economic uncertainty, monetary uncertainty, and the demand for money in Thailand

Author

Listed:
  • Mohsen Bahmani-Oskooee
  • Kaveepot Satawatananon
  • Dan Xi

Abstract

Economic uncertainty reflected in the volatility of real GDP and monetary uncertainty reflected in the volatility of nominal monetary figure such as M2 are said to induce people to change their portfolio and reallocate their assets between cash and other financial assets. Either uncertainty could make public more cautious and therefore, hold more cash and less of other assets. On the other hand, to hedge against uncertain prices, public may hedge by holding more real less risky assets and less cash. We test these hypotheses by including a measure of output uncertainty and a measure of monetary uncertainty in the demand for money function in Thailand. Using bounds testing approach we find that both measures of uncertainty do have short-run as well as long-run effects on the demand for cash balances.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Kaveepot Satawatananon & Dan Xi, 2015. "Economic uncertainty, monetary uncertainty, and the demand for money in Thailand," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 17(4), pages 467-476.
    • Handle: RePEc:ids:gbusec:v:17:y:2015:i:4:p:467-476
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    Citations

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    Cited by:

    1. Mohsen Bahmani-Oskooee & Majid Maki Nayeri, 2018. "Policy Uncertainty and the Demand for Money in Korea: An Asymmetry Analysis," International Economic Journal, Taylor & Francis Journals, vol. 32(2), pages 219-234, April.
    2. Mohsen Bahmani‐Oskooee & Majid Maki Nayeri, 2018. "Policy Uncertainty and the Demand for Money in Australia: an Asymmetry Analysis," Australian Economic Papers, Wiley Blackwell, vol. 57(4), pages 456-469, December.
    3. Eregha, Perekunah B. & Aworinde, Olalekan B. & Vo, Xuan Vinh, 2022. "Modeling twin deficit hypothesis with oil price volatility in African oil-producing countries," Resources Policy, Elsevier, vol. 75(C).
    4. Hussin Abdullah & Shehu El-Rasheed, 2019. "Financial Sector Reforms, Monetary and Output Uncertainties and the Behavior of Money Demand in Kenya: The Divisia Index Approach," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(7), pages 766-777, July.
    5. S. M. Woahid Murad, 2021. "Asymmetric Effects of Economic Uncertainty on Money Demand Function in Bangladesh: A Nonlinear ARDL and Cumulative Fourier Causality Approach," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 20(2), pages 1-13, September.
    6. S. M. Woahid Murad, 2021. "Asymmetric Effects of Economic Uncertainty on Money Demand Function in Bangladesh: A Nonlinear ARDL and Cumulative Fourier Causality Approach," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 20(2), pages 187-199, September.
    7. S. M. Woahid Murad, 2021. "Asymmetric Effects of Economic Uncertainty on Money Demand Function in Bangladesh: A Nonlinear ARDL and Cumulative Fourier Causality Approach," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 20(3), pages 201-213, December.

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