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Relationship of Fiscal Discipline and Household Income on Money Demand Function in Sri Lanka

Journal of Economics Bibliography

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Title Relationship of Fiscal Discipline and Household Income on Money Demand Function in Sri Lanka
 
Creator MAMOON, Dawood; University of Management and Technology C-II, Johar Town, 54770 Lahore, Pakistan
IFTIKHAR, Umbreen; Department of Economics, School of Business and Economics, University of Management and Technology Lahore, Pakistan. . +92 42 35212801 - 3426 .
HASSAN, Muhammad Shahid; Department of Economics, School of Business and Economics, University of Management and Technology Lahore, Pakistan. . +92 42 35212801 - 3426 .
 
Subject Sri Lanka; Money demand; Income; Interest rate; Exchange rate; Fiscal deficit; Urban and rural population.
D10; E41; E59.
 
Description Abstract. This paper attempts to find those determinants stirring the function of money demand in Sri Lanka during 1975-2013. The empirical analysis starts from applying the unit root tests i.e. Ng-Perron. We apply ARDL bound testing approach of co-integration to scrutinize the co-integration in variables. We select independent variables like per capita GDP, interest rate, exchange rate, fiscal deficit, urban population and rural population to determine money demand function. The findings revealed that income, interest rate and fiscal deficit effect money demand significantly and positively. The exchange rate affects negatively and significantly upon money demand. The stable money demand function is found over time applying CUSUM and CUSUMSQ stability test. The model of our study strongly recommends the real demand for M2 is vital monetary aggregate in terms of policy implication including the appropriateness of model in Sri Lanka.Keywords. Sri Lanka, Money demand, Income, Interest rate, Exchange rate, Fiscal deficit, Urban and Rural Population.JEL. D10, E41, E59.
 
Publisher Journal of Economics Bibliography
 
Contributor —
 
Date 2017-02-14
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.kspjournals.org/index.php/JEB/article/view/1180
10.1453/jeb.v4i1.1180
 
Source Journal of Economics Bibliography; Vol 4, No 1 (2017): March; 1-9
2149-2387
 
Language eng
 
Relation http://www.kspjournals.org/index.php/JEB/article/view/1180/1215
 
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