Micro foundations and stability of money demand function: The Case of Pakistan

Awan, Haroon Sarwar; Hussain, Zakir

ISBN 10: 3846543756 / ISBN 13: 9783846543757

Published by LAP LAMBERT Academic Publishing, 2011

About this Item

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Bibliographic Details

• Title: Micro foundations and stability of money demand function: The Case of Pakistan
• Publisher: LAP LAMBERT Academic Publishing
• Publication Date: 2011
• Language: English
• ISBN 10: 3846543756
• ISBN 13: 9783846543757
• Binding: Soft cover
• Condition: New

About this title

Synopsis

The study and estimation of demand for money function has a major role in monetary policy formulation. In the back drop of financial deregulation, global financial crisis and structural adjustments, it seems imperative to reinvestigate the money demand function for Pakistan.This study tried to formulate the Divisia aggregates for Pakistan and then used both official (Simple sum) and Divisia aggregates for estimating demand for money function for Pakistan. Moreover, the study tested both groups of money demand functions for stability. The comparison of Simple sum and Divisia based money demand estimates showed that the performance of Divisia based money demand functions was better than their Simple sum counterparts. The results of simple sum and Divisia demand functions showed that interest rate has a very limited role in explaining the demand for money, while the financial innovations were playing a significant role in explaining the money demand pattern.

About the Author

Haroon Sarwar Awan is Assistant Chief Macro economics section Planning commission of Pakistan. He has done his PhD from University of Sargodha, Pakistan under the Supervision of Dr.Zakir Hussain , Vice Chancellor GC University, Faisalabad, Pakistan.