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Author Darrat, A.F.en_US
Author Al-Sowaidi, S.S.en_US
Available date 2009-12-27T07:15:29Zen_US
Publication Date 2009-03-02en_US
Publication Name Review of Financial Economics
Citation Ali F. Darrat, Saif S. Al-Sowaidi, Financial progress and the stability of long-run money demand: Implications for the conduct of monetary policy in emerging economies, Review of Financial Economics, Volume 18, Issue 3, August 2009, Pages 124-131en_US
URI http://dx.doi.org/10.1016/j.rfe.2009.04.003en_US
URI http://hdl.handle.net/10576/10473en_US
Abstract This paper examines whether recent financial changes in three emerging market economies in the Gulf region (Bahrain, the UAE, and Qatar) have distorted the character and the stability of their underlying long-run money demand relations. Money demand instability prompts concerns about the appropriateness of targeting monetary aggregates and could weaken the presumed link between monetary policy and its ultimate objectives. Our results suggest that the quick pace of financial changes in the three emerging market economies did not cause undue shifts in their equilibrium money demand relations. Further evidence from direct tests of cointegration stability indicates the superiority of targeting M1 in the UAE and M2 for Qatar. In Bahrain, both M1 and M2 prove equally appropriate to guide monetary policy. Thus, despite the wave of financial developments that have recently swept the three Gulf economies, the evidence suggests that monetary authorities in these countries should maintain a close watch on monetary growth as a principal policy guide.en_US
Language enen_US
Publisher Elsevier Inc.en_US
Subject Financial developmenten_US
Subject Money demand instabilityen_US
Subject Monetary policyen_US
Subject Cointegrationen_US
Subject GCC regionen_US
Title Financial progress and the stability of long-run money demand: Implications for the conduct of monetary policy in emerging economiesen_US
Type Articleen_US


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