Financial Liberalization and Money Demand in Asean Countries: Implications for Monetary Policy

March 1, 1997

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Format: Chicago

Robert Dekle, and Mahmood Pradhan. Financial Liberalization and Money Demand in Asean Countries: Implications for Monetary Policy, (USA: International Monetary Fund, 1997) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the impact of financial market development and liberalization on money demand behavior in Indonesia, Malaysia, Singapore, and Thailand since the early 1980s. The empirical results indicate continuing instability in the interaction of money growth, economic activity, and inflation. Rapid growth and ongoing changes in financial markets suggest that policy needs to be guided by a wider set of monetary and real sector indicators of inflationary pressures. The feasibility of alternative policy frameworks--including nominal exchange rate targets, and inflation targets--is discussed in the context of the substantial and sustained increase in foreign capital inflows.

Subject: Banking, Demand for money, Financial markets, Inflation targeting, Monetary base, Monetary policy, Money, Securities markets, Stock markets

Keywords: Broad money, Broad money velocity, Cointegration, Demand for money, Europe, Financial Liberalization, Inflation targeting, Interest rate, Interest rate target, Market, Monetary base, Monetary policy, Money demand, Money demand behavior, Money demand equation, Money demand instability, Money market-LIBOR differential, Money-broad money, Nominal exchange rate, Opportunity cost, Paper market, Securities markets, Singapore bond market, Stock markets, Time deposit, WP

Publication Details

Pages:

38
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1997/036
Stock No:

WPIEA0361997
ISBN:

9781451845419
ISSN:

1018-5941

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