The Determinants of Demand for Money: Empirical Evidence from Some Selected Developing Countries

Abstract

This study is to estimate money demand determinants of some selected developing countries by using panel data from 1992- 2015 covering 95 countries having different income level. This study is based on three main income group countries lower, middle and upper middle income economies. Demand for money (M2), gross domestic product (GDP), inflation, rate of deposit, population and consumption are taking as variables. The stationary of variables heck through panel unit root. Variables are stationary at level and first difference. The results are estimated from panel ARDL (autoregressive distributed lag) technique. Result shows that short run exist in all these countries and their results are fluctuating from country to country. In long run, inflation, population and consumption has strong impact but economic activities (GDP) and rate of deposit varies from country to country because every country’s rules and regulations are different. The objective of the study is to estimate the determinants of money demand. How people demand for money in different countries and its impact on economic activities.