Abstract
This study examines the impact of financial innovation on money demand and to analyze the impact of money market disequilibrium on output gap using co integration modeling. After the confirmation of ADF result we use the cointegration technique for our first model and concluded that both the numbers of ATM and cards are negatively related to the demand for money. So in order to control the money demand we should increase the ATMs. The results also confirm that there exists a quantity theory with the inclusion of financial innovation in the money demand function. Our second model is related to the money market disequilibrium and the output gap. The findings of this second model shows that money market disequilibrium leads to wider the output gap.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.