Modelling the Demand for Money in Pakistan

Pakistan Development Review, Vol. 44, No. 3, pp. 233-252, Autumn 2005

21 Pages Posted: 9 Feb 2007

Abstract

The study estimated the dynamic demand for money (M2) function in Pakistan by employing cointegration analysis and error correction mechanism. The parameters of preferred model are found to be super exogenous for the relevant class of interventions. It is found that rate of inflation is important determinant of money demand in Pakistan. The analysis revealed that the rates of interest, market rate and bond yield, are important for the long run money demand behaviour. Since the preferred model is super exogenous, it can be used for policy analysis in Pakistan.

Keywords: Money Demand, Exogeneity, Cointegration, Pakistan

Suggested Citation

Qayyum, Abdul, Modelling the Demand for Money in Pakistan. Pakistan Development Review, Vol. 44, No. 3, pp. 233-252, Autumn 2005. Available at SSRN: https://ssrn.com/abstract=962052
No contact information is available for Abdul Qayyum

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