Financial Liberalization and Money Demand in ASEAN Countries: Implications for Monetary Policy

38 Pages Posted: 15 Feb 2006

See all articles by Robert Dekle

Robert Dekle

University of Southern California - Department of Economics

Date Written: March 1997

Abstract

This paper examines the impact of financial market development and liberalization on money demand behavior in Indonesia, Malaysia, Singapore, and Thailand since the early 1980s. The empirical results indicate continuing instability in the interaction of money growth, economic activity, and inflation. Rapid growth and ongoing changes in financial markets suggest that policy needs to be guided by a wider set of monetary and real sector indicators of inflationary pressures. The feasibility of alternative policy frameworks--including nominal exchange rate targets, and inflation targets--is discussed in the context of the substantial and sustained increase in foreign capital inflows.

Keywords: Financial Liberalization, Money Demand, Monetary Policy, Cointegration

JEL Classification: D92, E21, E51, E52, E58

Suggested Citation

Dekle, Robert, Financial Liberalization and Money Demand in ASEAN Countries: Implications for Monetary Policy (March 1997). IMF Working Paper No. 97/36, Available at SSRN: https://ssrn.com/abstract=882278

Robert Dekle (Contact Author)

University of Southern California - Department of Economics ( email )

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