Title

What determines the demand for money in the Asian-Pacific countries? An empirical panel investigation

RIS ID

25207

Publication Details

Valadkhani, A. (2008). What determines the demand for money in the Asian-Pacific countries? An empirical panel investigation. In M. M. Islam (Eds.), Fourth International Conference on Global Research in Business & Economics (pp. 348-361). Bangkok: Global Academy of Business and Economic Research.

Abstract

This paper examines the long- and short-run determinants of the demand for money in six countries in the Asian-Pacific region using panel data (1975-2002). Various country-specific coefficients are allowed to capture inter-country heterogeneities. Consistent with theoretical postulates, it is found that (a) the demand for money in the long-run positively responds to real income and inversely to the interest rate spread, inflation, the real effective exchange rate, and the US real interest rate; (b) the long-run income elasticity is greater than unity; and (c) both the currency substitution and capital mobility hypotheses hold only in the long run.

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