Abstract: This paper examines the role of credit restraint variables in the demand for money function for developing countries where interest rates are inoperative. A simultaneous equation model is proposed to allow for the interaction between these variables and the supply of money. Statistical results indicate that credit restraint variables in the demand for money function have stronger explanatory power than either the inflation rate or the real rate of return on money. The paper also deals with partial demand adjustment and adaptive expectations mechanisms with particular reference to the existence of credit rationing and substitution between money and real assets.
Publication Year: 1977
Publication Date: 1977-01-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 87
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