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Unit roots cointegration and the demand for money in India

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  • B. Bhaskara Rao

Abstract

It is shown that the variables in the demand for money in India are unit root variables. Therefore the long- and short-run money demand functions are estimated using cointegration methods and error correction formulation. It is found that the long-run income and interest rate elasticities are about 1.5 and -0.42 respectively.

Suggested Citation

  • B. Bhaskara Rao, 1995. "Unit roots cointegration and the demand for money in India," Applied Economics Letters, Taylor & Francis Journals, vol. 2(10), pages 397-399.
    • Handle: RePEc:taf:apeclt:v:2:y:1995:i:10:p:397-399
    DOI: 10.1080/758518999
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    Cited by:

    1. Khalfaoui, Rabeh & Padhan, Hemachandra & Tiwari, Aviral Kumar & Hammoudeh, Shawkat, 2020. "Understanding the time-frequency dynamics of money demand, oil prices and macroeconomic variables: The case of India," Resources Policy, Elsevier, vol. 68(C).
    2. Nitin, Arora & Asghar, OsatiEraghi, 2016. "Does India have a stable demand for money function after reforms? A macroeconometric analysis," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 44, pages 25-37.
    3. Mohsen Bahmani-Oskooee & Dan Xi, 2014. "Economic Uncertainty, Monetary Uncertainty, and the Demand for Money: Evidence From Asian Countries," Australian Economic Papers, Wiley Blackwell, vol. 53(1-2), pages 16-28, June.
    4. Rup Singh & Saten Kumar, 2012. "Application of the alternative techniques to estimate demand for money in developing countries," Journal of Developing Areas, Tennessee State University, College of Business, vol. 46(2), pages 43-63, July-Dece.
    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. B. Bhaskara Rao & Rup Singh, 2006. "Demand for money in India: 1953-2003," Applied Economics, Taylor & Francis Journals, vol. 38(11), pages 1319-1326.
    7. Mohsen Bahmani-Oskooee & Dan Xi & Sahar Bahmani, 2019. "More evidence on the asymmetric effects of exchange rate changes on the demand for money: evidence from Asian," Applied Economics Letters, Taylor & Francis Journals, vol. 26(6), pages 485-495, March.
    8. Bahmani-Oskooee, Mohsen & Tanku, Altin, 2006. "Black market exchange rate, currency substitution and the demand for money in LDCs," Economic Systems, Elsevier, vol. 30(3), pages 249-263, October.
    9. Mohsen Bahmani-Oskooee & Hafez Rehman, 2005. "Stability of the money demand function in Asian developing countries," Applied Economics, Taylor & Francis Journals, vol. 37(7), pages 773-792.
    10. Francisco Carneiro & Joao Faria, 1997. "Currency substitution and indexed money," Applied Economics Letters, Taylor & Francis Journals, vol. 4(3), pages 163-166.
    11. Ananda Weliwita & E. M. Ekanayake, 1998. "Demand for money in Sri Lanka during the post-1977 period: a cointegration and error correction analysis," Applied Economics, Taylor & Francis Journals, vol. 30(9), pages 1219-1229.

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