MONETIZATION, ECONOMIC DEVELOPMENT AND THE DEMAND FOR MONEY.

The article presents a modest contribution towards an understanding of the appropriate demand for money function for a developing economy with a shrinking barter sector. It also tries to estimate its degree of stability. Post-war annual data has been used which takes into account the special aspects...

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Publicado en:Review of Economics & Statistics Vol. 60; no. 4; pp. 614 - 619
Autor principal: Laumas, Prem S.
Formato: Artículo
Publicado: MIT Press Nov78
Materias:
Acceso en línea:Ver este registro en EBSCOhost
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        atl: MONETIZATION, ECONOMIC DEVELOPMENT AND THE DEMAND FOR MONEY.
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        au: Laumas, Prem S.
        affil: Northern Illinois University.
      su:
        Agricultural economics
        Agricultural productivity
        Gross national product
        Agriculture
        Demand for money
        India
      sug:
        subj:
          India
          Agricultural economics
          Agricultural productivity
          Gross national product
          Agriculture
          Demand for money
      ab: The article presents a modest contribution towards an understanding of the appropriate demand for money function for a developing economy with a shrinking barter sector. It also tries to estimate its degree of stability. Post-war annual data has been used which takes into account the special aspects of the Indian economy. During the period under study a significant proportion of income originated in the barter sector. Thus in 1950-51 a little over a third of India's Gross National Product originated in the barter sector. By 1965-66 the monetized sector began to contribute as much as 85% of the gross national product. It is well known that the most significant component of the non-monetized sector in India is agriculture. Agricultural production in such an economy is known to fluctuate erratically. Fluctuations in agricultural income could cause a great deal of instability in income velocity. In view of this, the relevant concept of income in a study of the demand for money for India is that portion of total income, which is derived from the monetized sector of the economy. A major concern of this study is to test the stability of the demand for money function in the above context by using a fairly robust technique that permits parameters to vary.
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