IDEAS home Printed from https://ideas.repec.org/a/jfr/ijfr11/v10y2019i6p232-240.html
   My bibliography  Save this article

Role of Advertising Expenditure as an Influential Non-traditional Regressor in Russia¡¯s Money Demand Specification

Author

Listed:
  • Lee-Chea Hiew
  • Chin-Hong Puah
  • Mohammad Affendy Arip
  • Mei-Teing Chong

Abstract

The term advertising refers to the strategy that affects consumer behaviour and induces higher household final consumption expenditure (HFCE), which is associated with incredibly demanding for money upon transaction usages and a reduction in search costs. The model of money demand that is stable, reliable and well defined is crucial for central banks in formulating their monetary policy to minimise the gap between the supply and demand of money. Hence, this paper examines the influence of expenditure in advertising (ADEX) towards the level of demand for money among the households in Russia. An approach known as Autoregressive distributed lag (ARDL) is opted to model the money demand function (MDF) of Russia and nine years of quarterly data from 2008 to 2016 have been used in the estimation. Empirical findings reveal that ADEX not only positively influences the Russian¡¯s money demand in long term, its MDF also becomes more superior when the ADEX has been added. As such, this study suggests that ADEX can be taken into account as a non-traditional explanatory variable in the formulation of a stable and well-specified MDF for the case in Russia.

Suggested Citation

  • Lee-Chea Hiew & Chin-Hong Puah & Mohammad Affendy Arip & Mei-Teing Chong, 2019. "Role of Advertising Expenditure as an Influential Non-traditional Regressor in Russia¡¯s Money Demand Specification," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(6), pages 232-240, October.
    • Handle: RePEc:jfr:ijfr11:v:10:y:2019:i:6:p:232-240
    DOI: 10.5430/ijfr.v10n6p232
    as

    Download full text from publisher

    File URL: http://www.sciedu.ca/journal/index.php/ijfr/article/view/15857/10107
    Download Restriction: no
    File URL: http://www.sciedu.ca/journal/index.php/ijfr/article/view/15857
    Download Restriction: no
    File URL: https://libkey.io/10.5430/ijfr.v10n6p232?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Arminio Fraga & Ilan Goldfajn & André Minella, 2004. "Inflation Targeting in Emerging Market Economies," NBER Chapters, in: NBER Macroeconomics Annual 2003, Volume 18, pages 365-416, National Bureau of Economic Research, Inc.
    2. Arrau, Patricio & De Gregorio, Jose & Reinhart, Carmen M. & Wickham, Peter, 1995. "The demand for money in developing countries: Assessing the role of financial innovation," Journal of Development Economics, Elsevier, vol. 46(2), pages 317-340, April.
    3. Belongia, Michael T. & Ireland, Peter N., 2019. "The demand for Divisia Money: Theory and evidence," Journal of Macroeconomics, Elsevier, vol. 61(C), pages 1-1.
    4. Stigler, George J., 2011. "Economics of Information," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 5, pages 35-49.
    5. Takeshi Inoue & Shigeyuki Hamori, 2014. "An Empirical Analysis of the Money Demand Function in India," World Scientific Book Chapters, in: INDIAN ECONOMY Empirical Analysis on Monetary and Financial Issues in India, chapter 2, pages 9-26, World Scientific Publishing Co. Pte. Ltd..
    6. Kremers, Jeroen J M & Ericsson, Neil R & Dolado, Juan J, 1992. "The Power of Cointegration Tests," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 325-348, August.
    7. I, Sahadudheen, 2012. "Demand for money and exchange rate: Evidence for wealth effect in India," MPRA Paper 65560, University Library of Munich, Germany, revised 2012.
    8. Albuquerque, Pedro H. & Gouvea, Solange, 2009. "Canaries and vultures: A quantitative history of monetary mismanagement in Brazil," Journal of International Money and Finance, Elsevier, vol. 28(3), pages 479-495, April.
    9. Tang, Tuck Cheong, 2004. "Demand for broad money and expenditure components in Japan: an empirical study," Japan and the World Economy, Elsevier, vol. 16(4), pages 487-502, December.
    10. G. M.P. Swann, 2009. "The Economics of Innovation," Books, Edward Elgar Publishing, number 13211.
    11. S. A. Ozga, 1960. "Imperfect Markets Through Lack of Knowledge," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 74(1), pages 29-52.
    12. Neil R. Ericsson, 1998. "Empirical modeling of money demand," Empirical Economics, Springer, vol. 23(3), pages 295-315.
    13. Franz Seitz & Julian von Landesberger, 2014. "Household Money Holdings in the Euro Area: An Explorative Investigation," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 2(2), pages 83-115, November.
    14. Banerjee, Abhijit V & Newman, Andrew F, 1993. "Occupational Choice and the Process of Development," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 274-298, April.
    15. Mankiw, N Gregory & Summers, Lawrence H, 1986. "Money Demand and the Effects of Fiscal Policies," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 18(4), pages 415-429, November.
    16. Guy Debelle & Miguel A Savastano & Paul R Masson & Sunil Sharma, 1998. "Inflation Targeting as a Framework for Monetary Policy," IMF Economic Issues 15, International Monetary Fund.
    17. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    18. Haider Mahmood & Tarek Tawfik Yousef Alkhateeb, 2018. "Asymmetrical effects of real exchange rate on the money demand in Saudi Arabia: A non-linear ARDL approach," PLOS ONE, Public Library of Science, vol. 13(11), pages 1-12, November.
    19. Howells, Peter & Hussein, Khaled, 1997. "The demand for money: Total transactions as the scale variable," Economics Letters, Elsevier, vol. 55(3), pages 371-377, September.
    20. Daniel Daianu & Laurian Lungu, 2007. "Inflation Targeting, Between Rhetoric and Reality. The Case of Transition Economies," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 4(1), pages 39-64, June.
    21. Rana Ejaz Ali Khan & Qazi Muhammad Adnan Hye, 2013. "Financial liberalization and demand for money: a case of Pakistan," Journal of Developing Areas, Tennessee State University, College of Business, vol. 47(2), pages 175-198, July-Dece.
    22. Athina Kanioura & Paul Turner, 2005. "Critical values for an F-test for cointegration in a multivariate model," Applied Economics, Taylor & Francis Journals, vol. 37(3), pages 265-270.
    23. Guy Debelle & Mr. Miguel A Savastano & Mr. Paul R Masson & Mr. Sunil Sharma, 1998. "Inflation Targeting as a Framework for Monetary Policy," IMF Economic Issues 1998/005, International Monetary Fund.
    24. John Paul Dunne & Elizabeth Kasekende, 2018. "Financial Innovation and Money Demand: Evidence from Sub‐Saharan Africa," South African Journal of Economics, Economic Society of South Africa, vol. 86(4), pages 428-448, December.
    25. Paresh Kumar Narayan, 2005. "The saving and investment nexus for China: evidence from cointegration tests," Applied Economics, Taylor & Francis Journals, vol. 37(17), pages 1979-1990.
    26. Lester G. Telser, 1964. "Advertising and Competition," Journal of Political Economy, University of Chicago Press, vol. 72(6), pages 537-537.
    27. Barry Eichengreen, 2006. "Can Emerging Markets Float? Should They Inflation Target?," Chapters, in: Matías Vernengo (ed.), Monetary Integration and Dollarization, chapter 8, Edward Elgar Publishing.
    28. 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.
    29. Rao, B. Bhaskara & Kumar, Saten, 2009. "A panel data approach to the demand for money and the effects of financial reforms in the Asian countries," Economic Modelling, Elsevier, vol. 26(5), pages 1012-1017, September.
    30. Matías Vernengo (ed.), 2006. "Monetary Integration and Dollarization," Books, Edward Elgar Publishing, number 3483.
    31. Albuquerque, Pedro H. & Gouvea, Solange, 2009. "Canaries and vultures: A quantitative history of monetary mismanagement in Brazil," Journal of International Money and Finance, Elsevier, vol. 28(3), pages 479-495, April.
    32. Tuck Cheong Tang, 2007. "Money demand function for Southeast Asian countries," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 34(6), pages 476-496, November.
    33. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
    34. Tuck Cheong Tang, 2002. "Demand for M3 and expenditure components in Malaysia: assessment from bounds testing approach," Applied Economics Letters, Taylor & Francis Journals, vol. 9(11), pages 721-725.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wen-Hsien Tan & Chin-Hong Puah & Shirly Siew-Ling Wong & Mei-Teing Chong, 2020. "Economic Uncertainty and the Demand for Broad Money in South Africa," Business and Economic Research, Macrothink Institute, vol. 10(2), pages 123-133, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Adil, Masudul Hasan & Haider, Salman & Hatekar, Neeraj, 2018. "The empirical verification of money demand in case of India: Post-reform era," MPRA Paper 87148, University Library of Munich, Germany, revised 07 Jun 2018.
    2. Ben-Salha, Ousama & Jaidi, Zied, 2014. "Some new evidence on the determinants of money demand in developing countries – A case study of Tunisia," The Journal of Economic Asymmetries, Elsevier, vol. 11(C), pages 30-45.
    3. Tuck Cheong Tang, 2007. "Money demand function for Southeast Asian countries," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 34(6), pages 476-496, November.
    4. Tuck Cheong Tang, 2008. "Money demand function for Southeast Asian countries," Journal of Economic Studies, Emerald Group Publishing, vol. 34(6), pages 476-496, January.
    5. Rana Ejaz Ali Khan & Qazi Muhammad Adnan Hye, 2013. "Financial liberalization and demand for money: a case of Pakistan," Journal of Developing Areas, Tennessee State University, College of Business, vol. 47(2), pages 175-198, July-Dece.
    6. Barnett, William A. & Ghosh, Taniya & Adil, Masudul Hasan, 2022. "Is money demand really unstable? Evidence from Divisia monetary aggregates," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 606-622.
    7. Yannick Roussel & Amjad Ali & Marc Audi, 2021. "Measuring The Money Demand In Pakistan: A Time Series Analysis," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 10(1), pages 27-41, March.
    8. Ademola Obafemi Young, 2019. "Growth Impacts of Income Inequality: Empirical Evidence From Nigeria," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(3), pages 226-262, December.
    9. Abdorreza Soleymani & Soo Y. Chua, 2014. "Effect of exchange rate volatility on industry trade flows between Malaysia and China," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 23(5), pages 626-655, August.
    10. Moses C. Kiptui, 2014. "Some Empirical Evidence on the Stability of Money Demand in Kenya," International Journal of Economics and Financial Issues, Econjournals, vol. 4(4), pages 849-858.
    11. John Paul Dunne & Elizabeth Kasekende, 2018. "Financial Innovation and Money Demand: Evidence from Sub‐Saharan Africa," South African Journal of Economics, Economic Society of South Africa, vol. 86(4), pages 428-448, December.
    12. Chor Foon Tang and Eu Chye Tan, 2012. "Electricity Consumption and Economic Growth in Portugal: Evidence from a Multivariate Framework Analysis," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    13. Serafin Grundl & You Suk Kim, 2019. "Consumer mistakes and advertising: The case of mortgage refinancing," Quantitative Marketing and Economics (QME), Springer, vol. 17(2), pages 161-213, June.
    14. Hwang, Jen-Te & Wen, Min, 2024. "Electronic payments and money demand in China," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 47-64.
    15. Fakhri J. Hasanov & Moayad H. Al Rasasi & Salah S. Alsayaary & Ziyadh Alfawzan, 2022. "Money demand under a fixed exchange rate regime: the case of Saudi Arabia," Journal of Applied Economics, Taylor & Francis Journals, vol. 25(1), pages 385-411, December.
    16. John Bosco Nnyanzi, 2018. "The Interaction Effect of Financial Innovation and the Transmission Channels on Money Demand in Uganda," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(12), pages 1-1, December.
    17. Onur zdemir, 2019. "Autoregressive Distributed Lag Approach to the Income Inequality and Financial Liberalization Nexus: Empirical Evidence from Turkey," International Journal of Economics and Financial Issues, Econjournals, vol. 9(6), pages 1-15.
    18. Chor Tang & Bee Tan, 2014. "The linkages among energy consumption, economic growth, relative price, foreign direct investment, and financial development in Malaysia," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(2), pages 781-797, March.
    19. Hiew, Lee-Chea & Puah, Chin-Hong & Habibullah, Muzafar Shah, 2013. "The Role of Advertising Expenditure in Measuring Indonesia’s Money Demand Function," MPRA Paper 50223, University Library of Munich, Germany.
    20. Tang, Chor Foon & Tan, Eu Chye, 2013. "Exploring the nexus of electricity consumption, economic growth, energy prices and technology innovation in Malaysia," Applied Energy, Elsevier, vol. 104(C), pages 297-305.

    More about this item

    Keywords

    money demand; advertising expenditure;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jfr:ijfr11:v:10:y:2019:i:6:p:232-240. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gina Perry (email available below). General contact details of provider: http://ijfr.sciedupress.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.