@techreport{Khan2010Testing,
abstract = {This paper tests the constancy and stationarity of  mechanic version of the money multiplier model for Pakistan using monthly data over the period 1972M1-2009M2. We split the data into pre-liberalization (1972M1-1990M12) and post-liberalization (1991M1-2009M2) periods to examine the impact of financial sector reforms. We first examine the constancy and stationarity of the money multiplier and the results suggest the money multiplier remains non-stationary for the entire sample period and sub-periods. We then tested cointegration between money supply and monetary base and find the evidence of cointegration between two variables for the entire period and two sub-periods. The coefficient restrictions are satisfied only for the post-liberalization period. Two-way long-run causality between money supply and monetary base is found for the entire period and post-liberalization. For the post-liberalization period the evidence of short-run causality running from monetary base to money supply is also identified. On the whole, the results suggest that money multiplier model can serve as framework for conducting short-run monetary policy in Pakistan. However, the monetary authority may consider the co-movements between money supply and reserve money at the time of conducting monetary policy.},
author = {Muhammad Arshad Khan},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {E51; E52; E58; 330; Money Multiplier; Reserve Money; Monetary Policy; Geldsch\"{o}pfung; Pakistan},
language = {eng},
number = {2010,2},
title = {Testing of money multiplier model for Pakistan: Does monetary base carry any information?},
type = {Economic analysis working papers},
url = {http://hdl.handle.net/10419/43423},
year = {2010}
}
