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A critical Discussion about Demand for Money Studies in the Iranian Economy (1989-2000)

Author

Listed:
  • Sayyed Mahdi Mostafavi

    (Academic staff, Faculty of Economics, University of Ferdowsi, Mashhad, Iran)

  • Kazam Yavari

    (Corresponding Author-Associate Professor of Economics, TMU, and Vice President, Research, ITSR)

Abstract

This paper provides a critical review of the demand for money estimation. In doing so, first we explain the main effective factors on the demand for money on the light of monetarists, which those are: transaction demand for money and opportunity cost of holding money. Then I have done a short report about the existing studies on the demand for money in the Iranian economy and have a special attention to their defects and problems. Some of them are as follow: Including the wrong factors on the demand for money model which in turn it leads to double calculating the budget deficit, making mistake to compute the data regarding to data conversion, including a stationary variable on the co-integration regression, and as a result obtaining wrong magnitudes for some coefficients in the model and finally the lack of offering interpretation for money income elasticity.

Suggested Citation

  • Sayyed Mahdi Mostafavi & Kazam Yavari, 2005. "A critical Discussion about Demand for Money Studies in the Iranian Economy (1989-2000)," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 10(2), pages 163-184, fall.
    • Handle: RePEc:eut:journl:v:10:y:2005:i:2:p:163
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    References listed on IDEAS

    as
    1. Milton Friedman, 1959. "The Demand for Money: Some Theoretical and Empirical Results," NBER Chapters, in: The Demand for Money: Some Theoretical and Empirical Results, pages 1-29, National Bureau of Economic Research, Inc.
    2. Bahmani-Oskooee, Mohsen, 1996. "The black market exchange rate and demand for money in Iran," Journal of Macroeconomics, Elsevier, vol. 18(1), pages 171-176.
    3. Banerjee, Anindya & Dolado, Juan J. & Galbraith, John W. & Hendry, David, 1993. "Co-integration, Error Correction, and the Econometric Analysis of Non-Stationary Data," OUP Catalogue, Oxford University Press, number 9780198288107.
    4. Stephen M. Goldfeld, 1973. "The Demand for Money Revisited," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 4(3), pages 577-646.
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    Cited by:

    1. Zahra Rouhani & Mehdi Behname & Sayed Mahdi Mostafavi, 2013. "A Comparative Study For Opportunity Cost Of Holding Money Between Selected Developing And Developed Countries," Romanian Economic Business Review, Romanian-American University, vol. 8(4), pages 7-17, december.

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    More about this item

    Keywords

    demand for money; inflation real money rate of interest exchange rate co-integration; estimation; GDP; M1 and M2.;
    All these keywords.

    JEL classification:

    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration

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