Munich Personal RePEc Archive

Monetary aggregates in Pakistan: theoretical and empirical underpinnings

Khan, Mahmood ul Hasan and Hussain, Fida (2005): Monetary aggregates in Pakistan: theoretical and empirical underpinnings.

[img]
Preview
PDF
MPRA_paper_31430.pdf

Download (360kB) | Preview

Abstract

The objective of this study is to analyze theoretical as well as empirical soundness of the current monetary aggregates (M2) and to propose a broader monetary aggregate (M3), by exploring the functional characteristics and empirical relevance of financial assets. We used annual time series data from FY76 to FY03 and employed both the functional and empirical (F-M dual criteria) approaches. The results indicate that current monetary aggregates seemed to have been defined more on functional considerations compared to the empirical evidence. The analysis of new set of financial assets suggests that, while the various savings schemes individually as well as in aggregate were able to meet F-M dual criteria, deposits of NBFIs failed to satisfy this criteria. However, the functional considerations suggest that these deposits should, nevertheless, be included in a broader definition of monetary aggregates (M3).

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.