Habibullah, Muzafar Shah
Real versus nominal adjustment mechanism of the Malaysian money demand function: further evidence.
Malaysian Management Journal, 1 (1).
This article investigates the issue of real versus nominal adjustment specifications in the Malaysian money demand function. Performance of both specifications was subjected to several test, namely ; model specification money demand function for M1, M2 and M3 are not stable for the period 1962-1991. Our question is, does financial innovation during the period of 1979-1991 affected the stability of the Malaysian money demand function? A test on Gurley-Shaw hypothesis was done to answer the above question. However, our results suggests that financial innovation does not play a major role in affecting the Malaysian money demand function during the period under study.
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