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Measuring Money Demand Function in Pakistan

Author

Listed:
  • Hassan, Shahid
  • Ali, Umbreen
  • Dawood, Mamoon

Abstract

This study investigates the factors such as interest rate, GDP per capita, exchange rate, fiscal deficit, urban and rural population to determine money demand function for Pakistan over the period from 1972-2013. We use ARDL Bound Testing approach in order to test long run relation between money demand and its factors whereas both long and short run coefficients will be found using similar approach. The results show that real interest rate exerts significant and negative effect upon money demand in both long and short run in Pakistan. The results also disclose that exchange rate and rural population are leaving significant but negative effect on the demand for money. These findings are robust to different diagnostic tests.

Suggested Citation

  • Hassan, Shahid & Ali, Umbreen & Dawood, Mamoon, 2016. "Measuring Money Demand Function in Pakistan," MPRA Paper 75496, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:75496
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Money Markets;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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