On the nexus between Stock Market Fluctuations and the Demand for Money in Saudi Arabia
Moayad Al Rasasi (),
Fares Rawah and
Business and Economic Research, 2020, vol. 10, issue 1, 142-154
This research paper estimates the augmented money demand function for Saudi Arabia while incorporating stock prices as one of the key determinants and utilizing quarterly data spanning over the period of 2010-2018. The estimated money demand function coincides with theoretical expectation regarding income and interest rate over long run. In Particular, the demand for money is statistically significant and positively related with income while itâ€™s negatively related with interest rate. On stock prices, the findings suggest that they are statistically significant and have positive impact on money demand over the long run. Moreover, the estimated error correction model indicates that it takes money demand about two quarters to adjust to its equilibrium condition.
Keywords: stock prices; money demand; Cointegration; Saudi Arabia; ECM (search for similar items in EconPapers)
JEL-codes: R00 Z0 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:mth:ber888:v:10:y:2020:i:1:p:142-154
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