Long- and Short-Run Determinants of the Demand for Money in the Asian-Pacific Countries: An Empirical Panel Investigation

Abbas Valadkhani

Annals of Economics and Finance, 2008, vol. 9, issue 1, 77-90

Abstract: This paper examines the long- and short-run determinants of the demand for money in six countries in the Asian-Pacific region using panel data (1975-2002). Various country-specific coefficients are allowed to capture inter-country heterogeneities. Consistent with theoretical postulates, it is found that (a) the demand for money in the long-run positively responds to real income and inversely to the interest rate spread, inflation, the real effective exchange rate, and the US real interest rate; (b) the long-run income elasticity is greater than unity; and (c) both the currency substitution and capital mobility hypotheses hold only in the long run.

Keywords: Demand for money; Money and interest rate spread; Panel data (search for similar items in EconPapers)
JEL-codes: C33 E41 E52 O11 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (21)

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Persistent link: https://EconPapers.repec.org/RePEc:cuf:journl:y:2008:v:9:i:1:p:77-90

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