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The Macroeconomic Reform and the Demand for Money in India

Author

Listed:
  • Rangan Gupta

    (Department of Economics, University of Pretoria)

  • Basab Dasgupta

Abstract

The paper is an attempt to estimate the short-run and long-run money demand functions in India for the decade of the ninety. The paper tries to closely follow the methodologies laid down in Chow (1966), Hendry (1980), Rose (1985) and Hwang (1985). The main findings of the paper are: (i) permanent income is not an appropriate epresentation of the scale variable, (ii) the positive interest elasticity of demand for money in the short-run (iii) limited ability of economic agents in removing disequilibrium of past period and (iv) rejection of the real adjustment hypothesis.

Suggested Citation

  • Rangan Gupta & Basab Dasgupta, 2005. "The Macroeconomic Reform and the Demand for Money in India," Working Papers 200502, University of Pretoria, Department of Economics.
    • Handle: RePEc:pre:wpaper:200502
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    Citations

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    Cited by:

    1. 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.
    2. Olomola, Aderbigbe & Gyimah-Brempong, Kwabena, 2014. "Loan demand and rationing among small-scale farmers in Nigeria:," IFPRI discussion papers 1403, International Food Policy Research Institute (IFPRI).

    More about this item

    Keywords

    Demand for Money; Error Correction Models; Partial Adjustment Models;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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