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Application of the alternative techniques to estimate demand for money in developing countries

Rup Singh and Saten Kumar ()
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Saten Kumar: The University of South Pacific, Fiji

Journal of Developing Areas, 2012, vol. 46, issue 2, 43-63

Abstract: In this paper, we applied alternative time series techniques and obtained similar summaries of demand for money relations for twelve developing countries. This indicates that adequate attention should be paid to the purpose of research and interpretation of results rather than to econometric techniques. We also find that income elasticities are close to unity for almost all of our sample countries and the interest rate elasticities are well determined and significant. Further, it is shown that demand for money in these countries is temporally stable and therefore the respective monetary authorities may target money supply as opposed to the rate of interest.

Keywords: Demand for money; Income and Interest Rate Elasticity; Cointegration; Monetary Policy (search for similar items in EconPapers)
JEL-codes: C22 E41 (search for similar items in EconPapers)
Date: 2012
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Working Paper: Application of the Alternative Techniques to Estimate Demand for Money in Developing Countries (2007) Downloads
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Handle: RePEc:jda:journl:vol.46:year:2012:issue2:pp:43-63