Divisia money and income in Indonesia: some results from error-correction models, 1981:1-1994:4

The purpose of the present study is to provide alternatives to the monetary aggregates currently defined and published by Bank of Indonesia. The alternative monetary aggregate proposed is the Divisia aggregate which is an appropriate measurement for the monetary services of a country. In this paper we investigate the long-run relationship between income and Divisia aggregate together with its counterpart-the conventional simple-sum aggregate for the period 1981:1 to 1994:4. Using the cointegration and error-correction framework, our results indicate that there is potential role for the Divisia monetary aggregate as a useful intermediate indicator in the conduct of monetary policy in Indonesia

An investigation on trade openness, fiscal policy and economic growth in Malaysia: Using an ARDL bounds testing approach

This study examines the impacts of trade openness and fiscal policy on economic growth in Malaysia between 1970 and 2003 using the autoregressive distributed lag (ARDL) approach and bounds test as proposed by Pesaran et al. (2001). Based on a structure consistent with the endogenous growth theory, the ARDL results show that, overall, trade openness and fiscal policy have strong positive impacts on economic growth in Malaysia over this period. This paper also develops a system instrumental variable method to estimate the structural speed of adjustment coefficient in an error correction model

Testing for Seasonal Integration and Cointegration: An Expository Note with Empirical Application to KLSE Stock Price Data

The purpose of this paper is to investigate the seasonal properties of the sectoral stock price series at the Kuala Lumpur Stock Exchange (KLSE) for the period 1978:1 to 1992:3. Our results suggest that the stock price indices at the KLSE exhibit seasonal unit roots, not only at the zero frequency, but in most cases at the biannual frequency. The finding that stock price indices exhibit seasonal integration has important implications for seasonal cointegration. However, our seasonal cointegration test results suggest that sectoral stock price indices at the KLSE are not seasonally cointegrated. These results imply that the informationally efficient stock market hypothesis cannot be rejected for the KLSE

Money and Biased Technical Progress: A Further. Test on 'Monetization as Technological Innovation' Hypothesis

Recent studies have tested the hypothesis of 'monetization as technological innovation' for the Indian economy. The objective of this paper is to test the above hypothesis on the the Malaysian rubber estate sector data over the period 1962-89. We seek to determine the bias in technical change on labor and capital in the rubber estate sector economy. In this study, we use both the conventional and the error correction model of production function. Results indicate that the total bias in technical change is labor saving. The study further points out that the failure to appropriately allow for non-stationary il1legrated variables in estimation has led lO estimates which are subjected to substantial upward bias

Gelagat M3 Di Malaysia: Satu Kajian Empirik

The financial sector in Malaysia has experienced rapid development. Parallel to this development, is the increasing role of broad money, M3. In fact, the Central Bank of Malaysia has recognised the importance of M3 and has emphasized M3for monetary policy purposes. The objective of this study is to determine empirically the factors affecting the demand for broad money, M3. Our results indicate that money demand for M3 in Malaysia is determined !Yy income level, short-term interest rate, inflation rate, rate of return on money and previous level of money holdings

Short-term interest rate and own rate of money in Malaysian money demand function

This article has examined empirically the issues of the role of short-term interest rate and rate of return on money in a money demand function of a developing economy-Malaysia. The results suggest that short-term interest rate and rate of return on money play important role in the Malaysian money demand function, and excluding it from the model could subject it to misspecification error. Also, the model that incorporates short-term interest rate and the rate of return on money is stable over time (in Malaysia, this is true for M2). The results of ex-post forcast suggest that the model that incorporates both short-term interest rate and rate of return on money has better forecasting ability

Are a rubber firm's gross revenue, capital expenditure and employment forecasts rational? - an empirical evidence

Business firms have always recognised the need for a view of the future and have used explicit forecasts in their decision making process. Forecasts of economic variables can be obtained directly from survey expectations. This study evaluates the rationality of economic forecasts made by rubber limited companies in a survey published in Business Expectations Survey of Limited Companies. Data on actual and forecast values of gross revenue, capital expenditure and employment are subjected to unbiasedness, and have no serial correlation, efficiency and orthogonality tests for rationality. Findings suggest that forecast values are unbiased predictors of actual values. Moreover, rubber firms in Malaysia were also found to be rational and utilised all available information efficiently when making forecast

Real Money Balances in the Production Function of a Developing Economy: A Preliminary Study of the Malaysian Agricultural Sector

Recent empirical evidence suggest that real money balances can be treated as a productive input in production. The reason for incorporating real money balances as a factor of production is because real money balances as a medium of exchange facilitate adjustments between capital and labour for specialization purposes and thus increase productivity. This study is an attempt to empirically test the evidence that real money balances is an input in the production function of the Malaysian agricultural sector. The results suggest that real money balances play significant role as a productive input in the production function of the Malaysian agricultural sector

Price Expectations and the Demand for Agricultural Loans

Separate studies on the formation of price expectations of future prices of agricultural commodities and the demand for loans have been extensive. However, studies on how farmers form their expectations on future prices of t he agricultural commodities as their decision variable when borrowing decision is made has been neglected. Therefore, the objective of this study is to determine how farmers or farm-firms forms their expectations about price at the time when borrowing decision is made. The study is also aimed at determining other factors that influence the demand for agricultural loans

Shadow Economy and Poverty

This study attempts to investigate the relationship between shadow economy and poverty by explaining the mechanism through which shadow economy affects poverty via its impact on government size and economic growth, and using the human poverty index (HPI) for developing and developed countries. In order to achieve this objective, the three-way interaction model is utilized using data of 139 developing and 23 developed countries separately during 1999-2007. For developing countries the dynamic panel system GMM and for developed countries, the fixed and random effects method of estimation is used. The results suggest that increasing the shadow economy leads to increase poverty in developing countries while it decreases poverty in developed countries.Shadow economy, Poverty, Panel data analysis