How Government Policy and Demographics affect Money Demand Function in Bangladesh
Umbreen Iftekhar (a.umbren@gmail.com),
Dawood Mamoon and
Muhammad Hassan (muhammadshahidhassan@yahoo.com)
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Umbreen Iftekhar: Department of Economics, School of Business and Economics, University of Management and Technology Lahore, Pakistan.
Turkish Economic Review, 2017, vol. 4, issue 1, 66-74
Abstract:
Money demand has a key position in macroeconomics generally and monetary economics particularly. The improved economic condition of any country is a sign of increasing money demand and deteriorating economic climate is a sign of decreasing money demand (Maravic & Palic, 2005). In this study, Autoregressive distributed lag (ARDL) approach of co-integration developed by Pesaran et al., (2001) is used to estimate the money demand function. Real interest rate, GDP per capita, exchange rate, fiscal deficit, urban and rural population are selected to determine money demand function in Bangladesh over the period from 1975-2013. The co-integration analysis reveals that interest rate and per capita GDP exerts significant effect upon money demand both in long run and short run as well. Both urban and rural population have significant effect on money demand in the long run and short run and money demand function is found stable over time.
Keywords: Bangladesh; Money demand; Per Capita GDP; Real interest rate; Exchange rate; Fiscal deficit; Urban and Rural Population. (search for similar items in EconPapers)
JEL-codes: E41 G18 N30 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:ksp:journ2:v:4:y:2017:i:1:p:66-74
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