The Determinants and Stability of Real Money Demand in Vietnam, 1999-2009

Huyen Diu Nguyen and Wade Pfau
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Huyen Diu Nguyen: National Graduate Institute for Policy Studies

No 10-14, GRIPS Discussion Papers from National Graduate Institute for Policy Studies

Abstract: Understanding the money demand function is highly important for monetary policy implementation, especially in a monetary targeting framework. The paper uses cointegration analysis and a reduced-form short-run error correction model to investigate the demand for money in Vietnam between 1999 and 2009. We find evidence for a cointegrating relationship between the real money demand, income, the foreign interest rate, and the real stock price. More importantly, statistical tests show that real money demand in Vietnam is stable in this period.

Keywords: International Diversification; Utility Maximization; EPF; Hypothetical Worker; Modern Portfolio Theory; Sri Lanka (search for similar items in EconPapers)
JEL-codes: C23 E41 E58 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2010-09
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-sea
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Citations: View citations in EconPapers (3)

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