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Demand for Money in India: Empirical Evidence during pre and post Liberations Period

The Article, Published by Purna Chandra Padhan in The Empirical Economic Letters, 10(2), 2011, 172-182, 2012

The paper estimates, assesses and tests the stability of money (broad money (M3)) demand function during pre and post liberalization period for India. In addition to real income and real interest rate, exchange rate as another variable is included in the demand function. The study didn’t find any substantial evidence to distinguish the money demand function from pre to post liberalization period. The estimated demand for money function is consistent with the theory and is stable as the variables statistically significantly affect the money demand.