Rup Singh

Demand for money in India: 1953-2003

The demand for money, especially in the developing countries, is an important relationship for formulating appropriate monetary policy and targeting monetary variables. In this paper the demand for narrow money in India is estimated and its robustness evaluated. It is found that there is a stable demand for money for almost half a century from 1953 to 2003. There is no evidence for any significant effects of the 1991 financial reforms.The demand for money, especially in the developing countries, is an important relationship for formulating appropriate monetary policy and targeting monetary variables. In this paper we estimate the demand for narrow money in India and evaluate its robustness. It is found that there is a stable demand for money for almost half a century from 1953 to 2003. There is no evidence for any significant effects of the

Demand for money for Fiji with PcGets

1991

Estimating export equations

financial reforms.

Investment ratio in growth equations

Methodological controversies on the relative merits of estimating time-series models with alternative approaches exist. However, applied researchers may eventually opt for an easy to use and computationally less demanding approach. This article shows that the LSE/Hendry approach, known as GETS, is promising when it is implemented with PcGets. To illustrate we report the GETS and the Johansen co-integration-based ECM equations, with PcGets, of the demand for money for Fiji.

Effects of Trade Openness on the Steady State Growth Rates of Selected Asian Countries with an Extended Exogenous Growth Model

Accurate estimates of the price and income elasticities of exports are valuable for growth policies based on trade promotion. However, not sufficient attention seems to have been paid to the specification of the relative price variable in some influential empirical works. This article estimates the export equation for Fiji, to show that inappropriate specification of the relative price variable may give underestimates of the price elasticity and overestimates of the income elasticity.

Application Of The Alternative Techniques To Estimate Demand For Money In Developing Countries

In the cross-country and time series studies on the determinants of the growth rate, capital stock is often proxied with the investment ratio due to lack of reliable data. While investment ratio may give good results with OLS, their robustness is doubtful. In addition there are other problems: (a) investment ratio may be a good proxy for the change in capital stock, but combining it with the level of employment to estimate a production function leads to misspecification bias; (b) it is not possible to impose any valid constraints on the coefficients of these variables and (c) if instrument variables are used to minimize any endogenous variable bias, the equation with the investment ratio seems to be fragile.

Some empirical evidence on the demand for money in the Pacific Island countries

The Solow (1956) growth model is extended with an endogenous growth framework to estimate the effects of trade openness on the Steady State Growth Rate (SSGR). Estimates of the augmented production functions are used to compute the SSGRs for Singapore, Malaysia, Hong Kong, India and Thailand. Good policies that increase the growth effects of openness is also tested with an interactive term. Our results show that Singapore has the highest SSGR of 2.75%, followed by Hong Kong and Thailand with 2.5%. India and Malaysia have lower SSGRs of 1.7% and 0.5%, respectively.

What is the Long Run Growth Rate of the East Asian Tigers

In this paper, we applied alternative time series techniques and obtained similar summaries of demand for money relations for twelve developing countries. This indicates that adequate attention should be paid to the purpose of research and interpretation of results rather than to econometric techniques. We also find that income elasticities are close to unity for almost all of our sample countries and the interest rate elasticities are well determined and significant. Further, it is shown that demand for money in these countries is temporally stable and therefore the respective monetary authorities may target money supply as opposed to the rate of interest.

A COINTEGRATION AND ERROR CORRECTION APPROACH TO DEMAND FOR MONEY IN FIJI: 1971-2002

Purpose - The purpose of this paper is to analyze narrow money demand functions for the Pacific Island countries (PICs) and evaluate their stability. The selected PICs are Fiji, Vanuatu, Samoa (SAM), Solomons and the Papua New Guinea. The stability of the demand for money is vital for the formulation of the monetary policy. Design/methodology/approach - The augmented Dicky-Fuller method is employed to test the time series properties of the variables. Alternative time series techniques such as general to specific (GETS) and Johansen maximum likelihood (JML) are used with annual data from 1974 to 2004 (except for SAM with data from 1980 to 2004) to estimate the narrow money demand equations. To draw inferences relative to the stability of the parameters, the study applies the cumulative recursive sum of recursive residuals (CUSUM) and the cumulative sum of squares of recursive residuals (CUSUMSQ). Findings - The results from the time series approaches of GETS and JML suggest that real income, nominal rate of interest and real narrow money are cointegrated. The CUSUM and CUSUMSQ stability test results indicate that the demand for money functions for these countries are stable and, therefore, the respective monetary authorities may consider targeting money supply in their conduct of monetary policy. It is argued that the financial sector reforms and liberalization is yet to have any significant effects on the money demand in the PICs. Research limitations/implications - The methods of estimation does not allow for structural breaks in the cointegrating relationship. It is hoped that future research may focus on using the structural break techniques and also investigate the stability of the demand for broad money in the PICs. Further due to limitations in the data, the authors were only able to select five PICs. Originality/value - This is the first paper in the literature that provides long-run estimates and stability results of the narrow money demand using the newest time series techniques for a group of PICs over the period 1974-2004.

A Survey of Growth and Development Issues of the Pacific Islands

New panel data estimates for the four East Asian Tigers show that the contribution of Total Factor Productivity (TFP) to growth is much higher than past estimates. An extended production function with learning by doing implies that TFP is about 3.5% and these countries will grow at this rate in the long-run.