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The Determinants and Stability of Real Money Demand in Vietnam, 1999-2009

Author

Listed:
  • NGUYEN Huyen Diu

    (National Graduate Institute for Policy Studies)

  • Wade D. Pfau

    (National Graduate Institute for Policy Studies)

Abstract

Understanding the money demand function is highly important for monetary policy implementation, especially in a monetary targeting framework. The paper uses cointegration analysis and a reduced-form short-run error correction model to investigate the demand for money in Vietnam between 1999 and 2009. We find evidence for a cointegrating relationship between the real money demand, income, the foreign interest rate, and the real stock price. More importantly, statistical tests show that real money demand in Vietnam is stable in this period.

Suggested Citation

  • NGUYEN Huyen Diu & Wade D. Pfau, 2010. "The Determinants and Stability of Real Money Demand in Vietnam, 1999-2009," GRIPS Discussion Papers 10-14, National Graduate Institute for Policy Studies.
  • Handle: RePEc:ngi:dpaper:10-14
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    References listed on IDEAS

    as
    1. Dario Cziráky & Max Gillman, 2006. "Money Demand in an EU Accession Country: A VECM Study of Croatia," Bulletin of Economic Research, Wiley Blackwell, vol. 58(2), pages 105-127, April.
    2. Abdul Qayyum, 2005. "Modelling the Demand for Money in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 44(3), pages 233-252.
    3. Daniel L. Thornton, 1983. "Why does velocity matter?," Review, Federal Reserve Bank of St. Louis, issue Dec, pages 5-13.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    International Diversification; Utility Maximization; EPF; Hypothetical Worker; Modern Portfolio Theory; Sri Lanka;

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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