Stability of Demand for Money Function by Business Firms in India
The IUP Journal of Monetary Economics, Vol. VIII, No. 4, pp. 23-45, November 2010
Posted: 25 Jan 2011
Date Written: January 24, 2011
Abstract
The present study is an attempt to test the stability of the demand for money function of business firms in India over the time period 1980-81 to 2004-05. To perform the stability test, the period of liberalization has been considered, and the study period has thus been divided into two sub-periods, viz., 1980-81 to 1990-91 and 1991-92 to 2004-05, i.e., the pre-liberalization period and the post-liberalization period respectively. The study has been conducted at aggregate level for all non-financial firms and at disaggregate level for five industrial groups. The study concludes that the overall demand for money function of the business firms in India has remained stable over time.
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