Impact of money & quasi money on the economy of Pakistan
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Transcript of Impact of money & quasi money on the economy of Pakistan
IMPACT OF MONEY &QUASI MONEY IN PAKISTAN ECONOMY
Respected Teacher: Amina Rizwan
Presented To: Prof Amina Rizwan
Presented By: Umair Arshad Marriam Gill Samra Ahmed Faiza Ramzan Fraz Ali Subhani
Introduction:
Average annual growth rate in money and quasi money. Money and quasi money comprise the sum of currency outside banks, demand deposits other than those of the central government, and the time, savings, and foreign currency deposits of resident sectors other than the central government. This definition is frequently called M2; it corresponds to lines 34 and 35 in the International Monetary Fund's (IMF) International Financial Statistics (IFS).
Variables: Independent Variables: Money and quasi money (M2) Dependent Variable: GDP Growth Rate
Literature Review:
In modern literature, money is defined in various ways some inclusive, other exclusive, of time and saving deposits and some even inclusive of others liabilities of nonbank financial intermediaries; and the demand for money is determined by a host of variables. Milton Friedman, defining money as currency held by the public plus adjusted demand deposits and time deposits of commercial banks postulates that the demand function the price level, the rate of change of price level, bond and equity yields, and a taste variables; and he concludes that the demand for money is similar to that for luxury goods.
Islamic Modes of Finance and the Role of Sukuk
Gold, silver, and all quasi-money assets, since gain in this exchange is riba. The objects of salam are commodities (or services) that are normally available in the market and can be specifically defined in terms of quantity, and quality. The exact date and place of delivery must be specifiedBy Abdel-Rahman Yousri Ahmad.
Medium of exchange:
When money is used to intermediate the exchange of goods and services, it is performing a function as a medium of exchange. It thereby avoids the inefficiencies of a barter system, such as the "double coincidence of wants" problem. (William Stanley Jevons 1875)
Unit of account:
A unit of account is a standard numerical unit of measurement of the market value of goods, services, and other transactions. Also known as a "measure" or "standard" of relative worth and deferred payment, a unit of account is a necessary prerequisite for the formulation of commercial agreements that involve debt. (William Stanley Jevons 1875)
Store of value:
To act as a store of value, a money must be able to be reliably saved, stored, and retrieved – and be predictably usable as a medium of exchange when it is retrieved. The value of the money must also remain stable over time. Some have argued that inflation, by reducing the value of money, diminishes the ability of the money to function as a store of value.(William Stanley Jevons 1875)
Standard of deferred payment:
While standard of deferred payment is distinguished by some texts, particularly older ones, other texts subsume this under other functions. A "standard of deferred payment" is an accepted way to settle a debt – a unit in which debts are denominated, and the status of money as legal tender, in those jurisdictions which have this concept, states that it may function for the discharge of debts. When debts are denominated in money, the real value of debts may change due to inflation and deflation and for sovereign and international debts via debasement and devaluation. (William Stanley Jevons 1875)
Measure of value:
Money acts as a standard measure and common denomination of trade. It is thus a basis for quoting and bargaining of prices. It is necessary for developing efficient accounting systems. But its most important usage is as a method for comparing the values of dissimilar objects. (William Stanley Jevons 1875)
Money Quasi money
Money
Money is any object or verifiable record that is generally accepted as payment for goods and services and repayment of debts in a particular country or socio-economic context. The main functions of money are distinguished as:
Any kind of object or verifiable record that fulfills these functions can be considered money.
Money is historically an emergent market phenomenon establishing commodity money, but nearly all contemporary money systems are based on fiat money.
Fiat money
Any check or note of debt is without intrinsic use value as a physical commodity. It derives its value by being declared by a government to be legal tender. It must be accepted as a form of payment within the boundaries of the country, for "all debts, public and private" .Such laws in practice cause fiat money to acquire the value of any of the goods and services that it may be traded for within the nation that issues it.
Quasi Money:
A term used to describe highly “liquid assets” other than “cash” that can be quickly exchanged for cash. For examples of quasi money would include bank account balances, Certificates of Deposit and U.S.Treasury Bills. The amount of quasi money in an economic is often used by central bankers, economists and fundamental forex traders to compute the current level of the money supply in a country. It is also called near money.
Definition of Near Money:
An economics term describing non-cash assets that are highly liquid, such as bank deposits, certificates of deposit (CDs) and Treasury Bills. Central banks, economists and statisticians may utilize near money when determining the current money supply. Near money refers to assets that can be quickly converted into cash. It is also called quasi money
Regression Analysis:
Regression analysis is a statistical tool for the investigation of relationships between variables. Usually, the investigator seeks to ascertain the causal effect of one variable upon another.
Regression techniques have long been central to the field of economic statistics (econometrics)
Data Interpretation:
By applying statistical procedure to analyze facts from this research..
Relationship of Money and Quasi money and its impact or effect on GDP
Year GDP Growth RateMoney and quasi money
(M2) as % of GDP
1998 2.550234294 47.1502314
1999 3.660132744 44.82025634
2000 4.260088011 38.59469838
2001 1.982484033 39.15125231
2002 3.224429973 43.25191223
2003 4.846320936 46.42524235
2004 7.368571358 48.36162239
2005 7.667304273 49.18651118
2006 6.177542036 44.55519367
2007 4.832817277 47.43290591
2008 1.701405465 43.54570483
2009 2.831658519 40.27346075
2010 1.606680858 41.13943884
2011 2.785944292 37.47580384
2012 4.015907671 39.9150827
Summary Output
Regression Statistics
Multiple R 0.620252803
R Square 0.38471354
Adjusted R Square 0.337383812
Standard Error 1.564870895
Observations 15
ANOVA Table
Column1 df SS MS FSignificance
F
Regression 1 19.90492 19.90492 8.12837 0.013630032
Residual 13 31.83467 2.448821
Total 14 51.73959
Coefficients
Standard
Error t StatP-
valueLower 95%
Upper 95%
Lower 95.0%
Upper 95.0%
Intercept
-9.58712133
44.77140
5-
2.009290.06573
7
-19.8951159
50.7208732
87
-19.8951159
50.72087328
7
X Variable 1
0.312183016
0.109498 2.85103 0.01363
0.075626233 0.5487398
0.075626233 0.5487398
RESIDUAL OUTPUTObservation Predicted Y Residuals
1 5.132380129 -2.582152 4.405001487 -0.744873 2.461488023 1.79864 2.635234708 -0.652755 3.915391092 -0.690966 4.90605086 -0.059737 5.510555822 1.8580168 5.768072093 1.8992329 4.322253422 1.855289
10 5.220626312 -0.3878111 4.007108153 -2.305712 2.985569124 -0.1539113 3.255912777 -1.6492314 2.112188153 0.67375615 2.873689583 1.142218
PROBABILITY OUTPUTPercentile Y3.333333 1.606680858
10 1.70140546516.66667 1.98248403323.33333 2.550234294
30 2.78594429236.66667 2.83165851943.33333 3.224429973
50 3.66013274456.66667 4.01590767163.33333 4.260088011
70 4.83281727776.66667 4.84632093683.33333 6.177542036
90 7.36857135896.66667 7.667304273
Normal Probability Plot
3.33
3333
3333
3333 10
16.6
6666
6666
6667
23.3
3333
3333
3333 30
36.6
6666
6666
6666
43.3
3333
3333
3333 50
56.6
6666
6666
6666
63.3
3333
3333
3333 70
76.6
6666
6666
6667
83.3
3333
3333
3333 90
96.6
6666
6666
6667
0
1
2
3
4
5
6
7
8
9Normal Probability Plot
Series1
Sample Percentile
Y
X Variable 1 Line fit Plot
47.1
5023
1396
4154
44.8
2025
6338
6139
38.5
9469
8376
4977
39.1
5125
2306
186
43.2
5191
2230
3238
46.4
2524
2347
2736
48.3
6162
2386
3503
49.1
8651
1178
3749
44.5
5519
3667
1145
47.4
3290
5913
6218
43.5
4570
4833
6813
40.2
7346
0746
9999
41.1
3943
8840
9064
37.4
7580
3842
4351
39.9
1508
2695
5459
0
1
2
3
4
5
6
7
8
9
X Variable 1 Line Fit Plot
YPredicted Y
X Variable 1
Y
Resources:
World Development Indicators World Bank Groups State Bank of Pakistan World Bank IMF Pakistan Bauru Of Statistics
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