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Determinants of money demand for India in presence of structural break: An empirical analysis

Sakshi Aggarwal

Business and Economic Horizons (BEH), 2016, vol. 12, issue 4, 173-177

Abstract: This paper empirically analyses India’s money demand function during the period 1996 to 2013 using quarterly data. Cointegration test suggests that money demand represented by M1 and Interest Rate have a unit root, whereas in the presence of structural break both of the variables are found to be stationary which implies that shocks are temporary in nature. It was found that there is no long term equilibrium relationship in the money demand function. Moreover, when the money demand function was estimated using dynamic OLS, it is concluded that GDP and short term interest rate has a positive impact on money demand (M1).

Keywords: Demand for money; monetary policy; cointegration (search for similar items in EconPapers)
JEL-codes: E41 E52 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (8)

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