Modelling the Demand for Money in Pakistan

Abdul Qayyum

MPRA Paper from University Library of Munich, Germany

Abstract: The study estimates the dynamic demand for money (M2) function in Pakistan by employing cointegration analysis and error correction mechanism. The parameters of preferred model are found to be super-exogenous for the relevant class of interventions. It is found that the rate of inflation is an important determinant of money demand in Pakistan. The analysis reveals that the rates of interest, market rate, and bond yield are important for the long-run money demand behaviour. Since the preferred model is super-exogenous, it can be used for policy analysis in Pakistan.

Keywords: Money Demand; super exogenous; error correction; cointegration; Pakistan (search for similar items in EconPapers)
JEL-codes: E41 (search for similar items in EconPapers)
Date: 2005, Revised 2005
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Citations: View citations in EconPapers (30)

Published in The Pakistan Development Review 44.3(2005): pp. 233-252

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:2057

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