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Estimating money demand function of Bangladesh

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dc.contributor.author Alam Miah, Md. Habibul
dc.date.accessioned 2012-05-02T09:04:01Z
dc.date.available 2012-05-02T09:04:01Z
dc.date.issued 2011
dc.identifier.uri http://hdl.handle.net/10361/1799
dc.description.abstract Although money demand equations have been estimated for many western countries, yet only recently many researchers have investigated the demand for money in mixed economies like Bangladesh. Co-integration technique is now a common method of estimating any money demand function. This paper empirically analyses the stability of the narrow and broad money demand functions (M1, M2, and M3) in Bangladesh for the period 1999QI-2005QIIII. To determine whether the policy framework satisfies the necessary condition for effectiveness of monetary policy, the stability of Bangladeshi M1, M2, and M3 money demand is estimated and tested by employing a recent co-integration procedure proposed by Johansen-Juselius (2001). It is shown that even though M1 and M2 monetary aggregates are co-integrated with income, interest rate and nominal effective exchange rate, application of Cumulative Sum (CUSUM) and Cumulative Sum of Square (CUSUMSQ) tests to the residuals of an error-correction model reveal that it is unstable. en_US
dc.publisher BRAC University en_US
dc.relation.ispartofseries BRAC University Journal, BRAC University;Vol. 8, No. 1 & 2, 2011, p. 31-36
dc.subject Unit root en_US
dc.subject Co-integration en_US
dc.subject Money demand en_US
dc.subject Stability en_US
dc.title Estimating money demand function of Bangladesh en_US
dc.type Article en_US


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