Panel Data Estimates of the Demand for Money in the Pacific Island Countries

Saten Kumar

EERI Research Paper Series from Economics and Econometrics Research Institute (EERI), Brussels

Abstract: The Pedroni (2000) panel cointegration method is used to estimate the cointegrating equations for the demand for narrow money for a panel of five Pacific Island Countries (Fiji, Samoa, Solomons, Vanuatu and Papua New Guinea) for the period 1975-2007. The effects of financial reforms are analyzed with estimates from sub-sample periods. Our results suggest that there is a unique cointegrated long run relationship between real narrow money, real income and nominal rate of interest. The major finding is that the money demand function has been stable and financial reforms are yet to have any significant effects in the Pacific Island Countries.

Keywords: Demand for money; income elasticity; semi-interest rate elasticity. (search for similar items in EconPapers)
JEL-codes: C33 E41 (search for similar items in EconPapers)
Date: 2010-08-12
New Economics Papers: this item is included in nep-mon
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eei:rpaper:eeri_rp_2010_12

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