Finding The Impact Of Agricultural Output, Population Growth Rate And Bank Branches On Demand For Money: An Extended Model

ABSTRACT

Role of money demand occupies a central place in regulating the monetary management of the economy and a topic of keen interest among researchers and academics (Sichei & Kamau, 2012). Growing money demand ensures an upsurge in the economic activity and vice versa. The present study analyzes the money demand function in Pakistan. The ARDL method to co-integration is used on data ranged between 1972 and 2018. The results showed that statistically significant effects of all main hypothesized factors including number of bank branches, population growth rate and agricultural output are found positive, negative and negative, respectively, both in the short-run and long- run. Whereas the effect of traditional factors viz., income and inflation rate on money demand appeared as positive, and statistically significant. The broad money demand function appeared to be stable in Pakistan. Policy to be focused on certain factors is discussed.