Ahmad Jafari Samimi; Zahra Elmi; Ali Sadeghzadeh Yazdi
Volume 7, Issue 25 , July 2007, , Pages 75-99
Abstract
In recent centuries, many surveys have been done about money demand function and the variables which affect it, in developed and developing countries. As far as knowing this function accurately, it helps economic planners to adopt suitable monetary and fiscal policies, in order to achieve economic ends. ...
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In recent centuries, many surveys have been done about money demand function and the variables which affect it, in developed and developing countries. As far as knowing this function accurately, it helps economic planners to adopt suitable monetary and fiscal policies, in order to achieve economic ends. Besides the known variables which estimate the money demand function, Gini coefficient variable can be used as income distribution variable in this function. In this article, the effect of Gini coefficient on money demand has been studied and evaluated. Also autoregressive distributed lag method (ARDL) and the annual data of 1999-2004 have been used. The results show that real money balance according to limited and wide money definition is cointegration with gross domestic product, rate of inflation and foreign exchange rate. And sign of Gini coefficient theoretically is not correct. To study short-run analysis of long-run equilibrium the error correction model was used, and the error correction term coefficient shows that, moving towards long-run equilibrium is slow in money market. The stability tests results show the stability of money demand function coefficients. In other words we can accept that money demand function is stable in Iran.
