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A critical Discussion about Demand for Money Studies in the Iranian Economy (1989-2000)

Sayyed Mahdi Mostafavi and Kazam Yavari
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Sayyed Mahdi Mostafavi: Academic staff, Faculty of Economics, University of Ferdowsi, Mashhad, Iran
Kazam Yavari: Corresponding Author-Associate Professor of Economics, TMU, and Vice President, Research, ITSR

Iranian Economic Review (IER), 2005, vol. 10, issue 2, 163-184

Abstract: This paper provides a critical review of the demand for money estimation. In doing so, first we explain the main effective factors on the demand for money on the light of monetarists, which those are: transaction demand for money and opportunity cost of holding money. Then I have done a short report about the existing studies on the demand for money in the Iranian economy and have a special attention to their defects and problems. Some of them are as follow: Including the wrong factors on the demand for money model which in turn it leads to double calculating the budget deficit, making mistake to compute the data regarding to data conversion, including a stationary variable on the co-integration regression, and as a result obtaining wrong magnitudes for some coefficients in the model and finally the lack of offering interpretation for money income elasticity.

Keywords: demand for money; inflation real money rate of interest exchange rate co-integration; estimation; GDP; M1 and M2. (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (1)

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