Demand for M2 in an Emerging-Market Economy: An Error-Correction Model for Malaysia
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Summary:
This paper analyses demand for M2 in Malaysia from August 1973 to December 1995 under both the closed- and open-economy framework. Based on the cointegration and weak-exogeneity test results, short-run dynamic error-correction models are specified and estimated. The results indicate that the demand is for real M2. Both the long- and short-run models are well-specified and are fairly stable. The long-run income elasticity is close to one with the opportunity cost variables carrying the expected signs. The external events have some influence on the stability.
Series:
Working Paper No. 1999/173
Subject:
Capital markets Demand for money Exchange rates Financial institutions Financial markets Foreign exchange Inflation Money Prices Treasury bills and bonds
English
Publication Date:
December 1, 1999
ISBN/ISSN:
9781451858617/1018-5941
Stock No:
WPIEA1731999
Pages:
49
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