IDEAS home Printed from https://ideas.repec.org/a/ksp/journ2/v4y2017i1p66-74.html
   My bibliography  Save this article

How Government Policy and Demographics affect Money Demand Function in Bangladesh

Author

Listed:
  • Umbreen IFTEKHAR

    (Department of Economics, School of Business and Economics, University of Management and Technology Lahore, Pakistan.)

  • Dawood MAMOON

    (Department of Economics, School of Business and Economics, University of Management and Technology Lahore, Pakistan.)

  • Muhammad S. HASSAN

    (Department of Economics, School of Business and Economics, University of Management and Technology Lahore, Pakistan.)

Abstract

Money demand has a key position in macroeconomics generally and monetary economics particularly. The improved economic condition of any country is a sign of increasing money demand and deteriorating economic climate is a sign of decreasing money demand (Maravic & Palic, 2005). In this study, Autoregressive distributed lag (ARDL) approach of co-integration developed by Pesaran et al., (2001) is used to estimate the money demand function. Real interest rate, GDP per capita, exchange rate, fiscal deficit, urban and rural population are selected to determine money demand function in Bangladesh over the period from 1975-2013. The co-integration analysis reveals that interest rate and per capita GDP exerts significant effect upon money demand both in long run and short run as well. Both urban and rural population have significant effect on money demand in the long run and short run and money demand function is found stable over time.

Suggested Citation

  • Umbreen IFTEKHAR & Dawood MAMOON & Muhammad S. HASSAN, 2017. "How Government Policy and Demographics affect Money Demand Function in Bangladesh," Turkish Economic Review, KSP Journals, vol. 4(1), pages 66-74, March.
    • Handle: RePEc:ksp:journ2:v:4:y:2017:i:1:p:66-74
    as

    Download full text from publisher

    File URL: http://www.kspjournals.org/index.php/TER/article/download/1184/1195
    Download Restriction: no
    File URL: http://www.kspjournals.org/index.php/TER/article/view/1184
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ahmed, Mansur, 2007. "Cointegration, Error Correction and the Demand for Money in Bangladesh," MPRA Paper 21026, University Library of Munich, Germany, revised 10 Jul 2009.
    2. Mohsen Bahmani-oskooee & Charikleia Economidou, 2005. "How stable is the demand for money in Greece?," International Economic Journal, Taylor & Francis Journals, vol. 19(3), pages 461-472.
    3. World Bank, 2012. "World Development Indicators 2012," World Bank Publications - Books, The World Bank Group, number 6014.
    4. Paresh Narayan & Seema Narayan & Vinod Mishra, 2009. "Estimating money demand functions for South Asian countries," Empirical Economics, Springer, vol. 36(3), pages 685-696, June.
    5. Baharumshah, Ahmad Zubaidi & Mohd, Siti Hamizah & Mansur M. Masih, A., 2009. "The stability of money demand in China: Evidence from the ARDL model," Economic Systems, Elsevier, vol. 33(3), pages 231-244, September.
    6. World Bank, 2013. "World Development Indicators 2013," World Bank Publications - Books, The World Bank Group, number 13191.
    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. Chen, Shengming & Hassan, Muhammad Shahid & Latif, Ayesha & Rafay, Abdul & Mahmood, Haider & Xu, Xiaowei, 2023. "Investigating resource curse/blessing hypothesis: An empirical insights from Luxembourg, the Netherlands, and Portugal economies," Resources Policy, Elsevier, vol. 83(C).
    2. Gao, Jinchao & Hassan, Muhammad Shahid & Kalim, Rukhsana & Sharif, Arshian & Alkhateeb, Tarek Tawfik Yousef & Mahmood, Haider, 2023. "The role of clean and unclean energy resources in inspecting N-shaped impact of industrial production on environmental quality: A case of high polluting economies," Resources Policy, Elsevier, vol. 80(C).

    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. Dawood MAMOON & Umbreen IFTIKHAR & Muhammad Shahid HASSAN, 2017. "Relationship of Fiscal Discipline and Household Income on Money Demand Function in Sri Lanka," Journal of Economics Bibliography, KSP Journals, vol. 4(1), pages 1-9, March.
    2. Maxim Pinkovskiy & Xavier Sala-i-Martin, 2014. "Africa is on time," Journal of Economic Growth, Springer, vol. 19(3), pages 311-338, September.
    3. Baurzhan, Saule & Jenkins, Glenn P., 2016. "Off-grid solar PV: Is it an affordable or appropriate solution for rural electrification in Sub-Saharan African countries?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 60(C), pages 1405-1418.
    4. Stefan Thewissen & Olaf Vliet & Chen Wang, 2018. "Taking the Sector Seriously: Data, Developments, and Drivers of Intrasectoral Earnings Inequality," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 138(3), pages 1023-1048, August.
    5. Brücker, Herbert & Bertoli, Simone & Fernández-Huertas Moraga, Jesús, 2013. "The European Crisis and Migration to Germany: Expectations and the Diversion of Migration Flows," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79693, Verein für Socialpolitik / German Economic Association.
    6. Luis Rosero-Bixby & William H. Dow & David H. Rehkopf, 2013. "The Nicoya region of Costa Rica: a high longevity island for elderly males," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 11(1), pages 109-136.
    7. Debashis Chakraborty & Sacchidananda Mukherjee, 2013. "Fiscal Subsidies and Environmental Sustainability: What does the Cross-country Empirical Estimates Suggest?," Foreign Trade Review, , vol. 48(3), pages 383-397, August.
    8. Katarzyna Burzynska & Olle Berggren, 2015. "The Impact of Social Beliefs on Microfinance Performance," Journal of International Development, John Wiley & Sons, Ltd., vol. 27(7), pages 1074-1097, October.
    9. Peter W. Daniels & Pengfei Ni, 2014. "Urbanisation and changes in the sectoral structure of economic development: the scale of the manufacturing sector in Chinese cities and the shift towards service industry," Working Papers hal-00943972, HAL.
    10. Anna Marie Dyhr Ulrich & Svend Hollensen & Britta Boyd, 2014. "Entry Mode Strategies into the Brazil, Russia, India and China (BRIC) Markets," Global Business Review, International Management Institute, vol. 15(3), pages 423-445, September.
    11. Kanslime, Monica K. & Karanja, Daniel K. & Alokit, Christine & Ochieng, Justus, 2018. "Derived demand for African indigenous vegetable seed: implications for farmer-seed entrepreneurship development," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 21(6), July.
    12. Shahbaz, Muhammad & Solarin, Sakiru Adebola & Mahmood, Haider & Arouri, Mohamed, 2013. "Does financial development reduce CO2 emissions in Malaysian economy? A time series analysis," Economic Modelling, Elsevier, vol. 35(C), pages 145-152.
    13. Roberto Ricciuti & Antonio Savoia & Kunal Sen, 2019. "What determines administrative capacity in developing countries?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(5), pages 972-998, October.
    14. Ebenezer Adesoji Olubiyi, 2014. "Trade, Remittances and Economic Growth in Nigeria: Any Causal Relationship?," African Development Review, African Development Bank, vol. 26(2), pages 274-285, June.
    15. Martins Iyoboyi & Olarinde Muftau O & Abdulsalam S. Ademola, 2016. "The Institutional and Policy Environment and the Quest for Industrialization in Nigeria," Journal of Economics and Behavioral Studies, AMH International, vol. 8(2), pages 13-25.
    16. Kundu, Nobinkhor & Mollah, Muhammad Musharuf Hossain, 2014. "Empirical Approaches to the Post-Keynesian Theory of Demand for Money: An Error Correction Model of Bangladesh," MPRA Paper 65727, University Library of Munich, Germany, revised 14 Oct 2014.
    17. Hwang, Jen-Te & Wen, Min, 2024. "Electronic payments and money demand in China," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 47-64.
    18. Kent Matthews, 2014. "Cost Inefficiency in the Pakistan Banking Sector 2002-2009," SBP Research Bulletin, State Bank of Pakistan, Research Department, vol. 10, pages 1-20.
    19. Bandyopadhyay, Subhayu & Lahiri, Sajal & Younas, Javed, 2015. "Financing growth through foreign aid and private foreign loans: Nonlinearities and complementarities," Journal of International Money and Finance, Elsevier, vol. 56(C), pages 75-96.
    20. Peter Edward & Andy Sumner, 2013. "Inequality from a global perspective: An alternative approach," Working Papers 302, ECINEQ, Society for the Study of Economic Inequality.

    More about this item

    Keywords

    Bangladesh; Money demand; Per Capita GDP; Real interest rate; Exchange rate; Fiscal deficit; Urban and Rural Population.;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • N30 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - General, International, or Comparative

    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:ksp:journ2:v:4:y:2017:i:1:p:66-74. 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: Bilal KARGI (email available below). General contact details of provider: http://www.kspjournals.org .

    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.