Monetary aggregates in Pakistan: theoretical and empirical underpinnings
The objective of this study is to analyze theoretical as well as empirical soundness of the current monetary aggregates (M2) and to propose a broader monetary aggregate (M3), by exploring the functional characteristics and empirical relevance of financial assets. We used annual time series data from FY76 to FY03 and employed both the functional and empirical (F-M dual criteria) approaches. The results indicate that current monetary aggregates seemed to have been defined more on functional considerations compared to the empirical evidence. The analysis of new set of financial assets suggests that, while the various savings schemes individually as well as in aggregate were able to meet F-M dual criteria, deposits of NBFIs failed to satisfy this criteria. However, the functional considerations suggest that these deposits should, nevertheless, be included in a broader definition of monetary aggregates (M3).
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| Date of creation: | Apr 2005 |
| Date of revision: | 2005 |
| Handle: | RePEc:pra:mprapa:31430 |
| Contact details of provider: | Postal: Ludwigstraße 33, D-80539 Munich, Germany Phone: +49-(0)89-2180-2459 Fax: +49-(0)89-2180-992459 Web page: https://mpra.ub.uni-muenchen.de More information through EDIRC
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References listed on IDEAS
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- Ewe-Ghee Lim & Subramanian S Sriram, 2003. "Factors Underlying the Definition of Broad Money; An Examination of Recent U.S. Monetary Statistics and Practices of Other Countries," IMF Working Papers 03/62, International Monetary Fund.
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