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Measuring the Money Demand in Pakistan: A Time Series Analysis

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  • Roussel, Yannick
  • Ali, Amjad
  • Audi, Marc

Abstract

This study has explored the factor impacting money demand in the case of Pakistan from 1980 to 2019. Broad Money is taken as the dependent variable, consumption of the household, consumption of government, interest rate, consumer price index, population growth, and remittances are selected independent variables. Augmented Dickey-fuller (ADF) and Phillip Perron (PP) unit root tests are used for examining the stationary of the variables. ARDL method is used for finding the cointegration among the variables of the model. Granger Causality test is used for examining the causal relationship among variables. The results of this study show that there is mixed order of integration among variables of the model. The estimated results of the study show that socio-economic factors play an important role in determining the money demand in Pakistan. So, socio-economic factors play an important role in determining money demand in the case of Pakistan.

Suggested Citation

  • Roussel, Yannick & Ali, Amjad & Audi, Marc, 2021. "Measuring the Money Demand in Pakistan: A Time Series Analysis," MPRA Paper 106629, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:106629
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    More about this item

    Keywords

    Money demand; consumption; interest rate; population growth; remittances;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • P23 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
    • P44 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - National Income, Product, and Expenditure; Money; Inflation

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