Estimating Demand for Money in Philippines

Taupo, Tauisi (2008) Estimating Demand for Money in Philippines. University of the South Pacific, School of Economics Working Paper Series, Suva, Fiji.

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Abstract

The purpose of this paper is to estimate the demand for narrow money for the Philippines, test for the effects of structural variables and to determine stability of money demand as they have implications on options of monetary policy targets. This paper estimates the demand for money (M1) for Philippines applying three alternative time series methods which generally gave similar results. The outcome estimates of income elasticity for Philippines is high at an average of the three alternative techniques employed at 1.245 while the average interest rate elasticity is -0.280 which are statistically significant with correct signs. The stability test shows that demand for money function for Philippines is temporally stable and therefore targeting money supply as opposed to the rate of interest is an appropriate measure to consider by respective monetary authorities in Philippines. Estimated results are consistent with both prior studies and across the three methods engaged. However, they may differ in their precision but only marginally.

Item Type:	Other
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HG Finance
Divisions:	Faculty of Business and Economics (FBE) > School of Economics
Depositing User:	Tauisi Taupo
Date Deposited:	01 Oct 2018 00:01
Last Modified:	01 Oct 2018 00:01
URI:	http://repository.usp.ac.fj/id/eprint/11018

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