Capital Flows and Money Supply: The Degree of Sterilisation in Pakistan

Pakistan Development Review, Vol. 42, No. 4, Winter 2003

11 Pages Posted: 7 Mar 2007

See all articles by Abdul Qayyum

Abdul Qayyum

Arshad

Quaid-i-Azam University - Pakistan Institute of Development Economics (PIDE)

Abstract

In this study an attempt has been made to develop and estimate the domestic credit policy reaction function to analyse the monetary implications of interventions and sterilisation policy in Pakistan using quarterly data ranging from 1982 Q3 through 2001 Q2. By employing Johansen multivariate cointegration technique, this paper has considered the degree of sterilisation that the Pakistan has used in controlling capital flows.

The evidence suggests that Pakistan sterilises around 72 percent of international reserve inflows in the long-run while 88 percent in the short-run during the period of study.

Keywords: Money Supply, sterlization, capital inflow, dometic credit, unit root, cointegration

Suggested Citation

Qayyum, Abdul and Khan, Muhammad Arshad, Capital Flows and Money Supply: The Degree of Sterilisation in Pakistan. Pakistan Development Review, Vol. 42, No. 4, Winter 2003. Available at SSRN: https://ssrn.com/abstract=967559

Muhammad Arshad Khan

Quaid-i-Azam University - Pakistan Institute of Development Economics (PIDE) ( email )

Quaid-i-Azam University Campus
P.O.Box 1091
Islamabad, Federal Capital 44000
Pakistan

No contact information is available for Abdul Qayyum

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