International Journal of Business and Economics Volume 1, No. 2 August, 2002

Long-Run Demand for Money in Hong Kong: An Application of the ARDL Model

Mohsen Bahmani-Oskooee

Department of Economics, University of Wisconsin-Milwaukee, U.S.A.

Raymond Chi Wing Ng

Centre for Asian Pacific Studies, Lingnan University, Hong Kong

Abstract

We examine the long-run demand for money of Hong Kong using the autoregressive distributed lag (ARDL) cointegration procedure on quarterly data over the period 1985Q1-1999Q4. Estimation results suggest that HK$M2 is cointegrated with its determinants. In addition, the CUSUM and CUSUMSQ tests confirm the stability of the money demand function.

Keywords：money demand, Hong Kong, cointegration, error correction model, CUSUM test.

JEL Classifications：C12, C22, E41.

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