Demand for Money

“Demand for money” plays a key role in macroeconomics in general and in monetary economics in particular, a stable feature of demand for money is generally considered important to formulate and enforce an eوٴectLve monetary policy. Understanding the demand for money in an economy is an important prerequisite for formulating and conducting monetary policy. Нe demand for money is mainly Lnfluenced by the levels of prices, interest rates, real national output and the pace of finDncLDO innovation. Most of the empirical studies reviewed expressed the money demand functions in real terms and specLfied the models as log-linear with the estimation relying mainly on error correction models. Нe contemporary studies acknowledged the role of changing external and internal economic and finDncLDO landscape, as well as the achievements in the time series econometric estimation of money demand functions. Understanding the demand for money in an economy is an important prerequisite for formulating and conducting monetary policy. Which lists the quantities of a good that buyers are willing to purchase at dLوٴerent prices the quantity Нese are important variables that Dوٴect the production and consumption decisions in an economy. Economic agents are motivated to hold money to facilitate transactions, precautionary and for speculative purposes.