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Panel Data Estimates of the Demand for Money in the Pacific Island Countries

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  • Saten Kumar

Abstract

The Pedroni (2000) panel cointegration method is used to estimate the cointegrating equations for the demand for narrow money for a panel of five Pacific Island Countries (Fiji, Samoa, Solomons, Vanuatu and Papua New Guinea) for the period 1975-2007. The effects of financial reforms are analyzed with estimates from sub-sample periods. Our results suggest that there is a unique cointegrated long run relationship between real narrow money, real income and nominal rate of interest. The major finding is that the money demand function has been stable and financial reforms are yet to have any significant effects in the Pacific Island Countries.

Suggested Citation

  • Saten Kumar, 2010. "Panel Data Estimates of the Demand for Money in the Pacific Island Countries," EERI Research Paper Series EERI_RP_2010_12, Economics and Econometrics Research Institute (EERI), Brussels.
  • Handle: RePEc:eei:rpaper:eeri_rp_2010_12
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    Cited by:

    1. Frauke Dobnik, 2013. "Long-run money demand in OECD countries: what role do common factors play?," Empirical Economics, Springer, vol. 45(1), pages 89-113, August.

    More about this item

    Keywords

    Demand for money; income elasticity; semi-interest rate elasticity.;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

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