Stock prices and demand for money in China: new evidence.

Citation

Baharumshah, Ahmad Zubaidi and Mohd, Siti Hamizah and Yol, Marial Awou (2009) Stock prices and demand for money in China: new evidence. International Financial Markets, Institutions and Money, 19 (1). pp. 171-187.

Abstract

This paper investigates the relationship between stock prices and the real money demands for China within a cointegrated framework. This study reports two important results. First, test results reveal that a stable long-term relationship exists between broad money (M2) and its determinants including real income, foreign interest rate, and stock prices. Second, stock prices have a significant substitute (positive) effect on long-run broad-money (M2) demand and its omission can lead to serious misspecification in the money demand function in both the short- and long-run. Finally, we demonstrate that long-run income elasticity is not significantly different from unity with the inclusion of stock prices in the money demand equation.

Download File

Preview

PDF (Abstract)
Stock prices and demand for money in China.pdf
Download (84kB) | Preview

Additional Metadata

Item Type:	Article
Subject:	Stock - Prices - China.
Subject:	Demand for money - China.
Subject:	Monetary policy - China.
Divisions:	Faculty of Economics and Management
Keywords:	Real M2 money demand; Cointegration test.
Depositing User:	Emelda Mohd Hamid
Date Deposited:	14 May 2013 03:52
Last Modified:	03 Sep 2015 03:04
URI:	http://psasir.upm.edu.my/id/eprint/16849
Statistic Details:	View Download Statistic

Actions (login required)

View Item