GRIPS 政策研究センター Policy Research Center


Sep 1, 2010 Report No:10-14

The Determinants and Stability of Real Money Demand in Vietnam, 1999-2009

  • Pfau WadeGRIPS
  • NGUYEN Huyen DiuEconomic Research Division, Monetary Policy Department, The State Bank of Vietnam
Field Economics
Language English

Understanding the money demand function is highly important for monetary policy implementation, especially in a monetary targeting framework. The paper uses cointegration analysis and a reduced-form short-run error correction model to investigate the demand for money in Vietnam between 1999 and 2009. We find evidence for a cointegrating relationship between the real money demand, income, the foreign interest rate, and the real stock price. More importantly, statistical tests show that real money demand in Vietnam is stable in this period.

Keywords money demand, Vietnam, error correction model
attachment 10-14.pdf