Empirical Evidence for a Money Demand Function in Southeast Asian Countries: A Panel Data Analysis

Abstract

Modeling demand for money is an important issue in the applied economics. The objective of this study was to estimate the demand for money in Southeast Asian countries namely Indonesia, Malaysia, Philippines, Singapore, and Thailand using the panel data analysis to analysis counteraction. We constructed an aggregate data panel for Southeast Asia’s five countries and used Pedroni’s panel co integration test to verify the co integration hypothesis among the variables of the money demand function. We estimated the panel and the group mean co integration vectors using FMOLS developed by Pedroni. We found strong evidence of co integration among our variables.