DEMAND for MONEY is an important part of macroeconomic models and the monetary policy; furthermore, DEMAND for MONEY and its stability are important in an economy especially in the design of monetary policy. We estimate the Iran's DEMAND for MONEY for period (1971-200A) using the autoregressive distributed lag (ARDL) method. We also use the error correction model for short-run dynamic analysis and stability test in model. The explanatory variables include gross domestic product, inflation rate, and foreign exchange rate, short-run and long-run interest. The results show that there is a long-run equilibrium relationship between the variables. According to our finding, the gross domestic product have positive impact on the DEMAND for MONEY and exchange rate and inflation rate have significant negative effects on the DEMAND for MONEY in Iran.

Adopting monetary and financial policies in economy of each country and their maximum effects depend on the correct recognition of MONEY DEMAND FUNCTION in that country. On the other hand, stability recognition and anticipating the MONEY DEMAND also can be effective on controlling the mass of MONEY in order to meet economic objectives and minimizing damages caused by wrong performance of monetary system. In present paper, estimation, FUNCTION stability and forecasting MONEY DEMAND FUNCTION in Iran during the period from 1971 through 2009 are investigated using ARDL method. Results indicate that there is a long-run equilibrium relationship among this FUNCTION's variables, and direct relationship of Gross Domestic Product (GDP) and inverse relationship of exchange rate variables and rate of inflation on MONEY DEMAND FUNCTION are also approved. Also, a stability test was conducted on this FUNCTION where results suggest that discussed FUNCTION has long term structural stability and it can be said that reaching long term objectives according to stability of MONEY DEMAND FUNCTION will be next to possible with a shorter interval by changing the effective variables or applying the appropriate monetary and FUNCTIONal policies.

The main purpose of this paper is to estimate the DEMAND for MONEY in Iranian economy over 1338-1386 period using co-integration and error correction methodology. The analyses showed narrow definition of MONEY (M1), domestic gross product, parallel exchange rate, prices level and return rate on long-term loans to private sector are integrated. Thus, by using Johansen and Juselius maximum likelihood co-integration approach the long-term DEMAND for MONEY is specified and estimated. Empirical results showed there are two co-integrated vector variables. Error correction of 0.053 indicated that despite long-run equilibrium in the MONEY market, moving towards equilibrium in this market is done slowly. CUSUM and CUSUMQ statistics results showed that MONEY DEMAND FUNCTION during this period was stable. Moreover, the substitution of MONEY in Iran is confirmed.

The paper re-examines the MONEY DEMAND FUNCTION in sub-regions of Sub-Saharan Africa and its sub-regions with annual time series spanning between 1980 and 2017. Panel homogeneous Autoregressive Distributed Lag, panel co-integration tests, and Dumitrescu and Hurlin panel causality test were employed for analysis. The empirical results showed a co-integrating relation between MONEY DEMAND and its determinants in SSA and its sub-regions. The results also indicated divergence in terms of short-run determinants, long-run determinants, and error correction due to shocks across the sub-regions. The causality test revealed a bi-causal relationship between MONEY DEMAND and its determinants in SSA economies. However, there was divergence in the causality results across the sub-regions. We conclude that price level is the major driver of MONEY DEMAND in Sub-Saharan Africa. The paper, therefore, recommends that governments in SSA economies should employ policies that can enhance price stabilization, which will consequently lead to MONEY DEMAND stability in the whole region.

Usually the role of expectations in MONEY DEMAND FUNCTION is raised. One of parameters that influences MONEY DEMAND is inflation and it reduces MONEY DEMAND level. Inflation in the economy is a FUNCTION of other variables, including expectations. Inflationary expectations in the economy can be shaped as adaptive or rational. By this article, we test these concepts and show the FUNCTION of MONEY DEMAND based on expectations, and report its estimations. As the results indicate the adaptive expectation describe better the DEMAND FUNCTION for MONEY and it is a FUNCTION of production level and inflation rate in Iran.

Considering the exchange rate changes due to different foreign exchange policies in recent years, the study of the effect of currency shocks on the DEMAND for MONEY in Iran can lead to useful results. Therefore, in this study, we investigate the symmetry or asymmetry of the effect of positive and negative exchange rate shocks on MONEY DEMAND FUNCTION by using Nonlinear Autoregressive Distributed Lag model on the latest seasonal data up to year 1396. At first, the existence of long-term equilibrium relationship was examined using Pesaran Bound test and was confirmed. The results of the model show that Growth Domestic Production (GDP) and Ratio of government budget deficit to GDP have positive effect on MONEY DEMAND and inflation has negative effect on it. The results also indicate that GDP and the state budget deficit variables positive impact on the MONEY DEMAND and inflation has a negative impact. According to the results of the Wald test, the level of positive and negative shocks of exchange rate on MONEY DEMAND is asymmetric in the short run but symmetric in the long run. Also by comparing the positive and negative effects of exchange rate shocks on MONEY DEMAND, it can be concluded that the positive effect of exchange rate shocks on MONEY DEMAND is more than the negative effect of shocks on exchange rate.

MONEY DEMAND is one of the key variables in the economy which is considered by the policymakers in determining monetary policies. In fact, the impact of monetary policies is transmitted from the MONEY DEMAND channel by the private sector to the real sector of the economy. Therefore, more accurate estimation and forecasting of this variable in terms of environmental factors could be helpful for the monetary policymakers. In the present study, the adjusted FUNCTION of real MONEY DEMAND with respect to the variables of economic sanctions, economic uncertainties and underground economy by using Markov Switching Model for the period of 1979 to 2018 with two regimes of high MONEY DEMAND (a regime with greater y-intercept) and lower MONEY DEMAND (a regime with less y-intercept) were estimated. The Artificial Neural Network (ANN) method was used in order to forecast the MONEY DEMAND FUNCTION. Then, in order to ensure the high predictive capability of the ANN method, the forecast was performed by Markov Switching Model. The results demonstrated that Measure of National Income and Output has a positive effect, housing returns (the proxy for interest rates) has a negative effect, exchange rate in both regimes has a negative effect, the volume of the underground economy in both regimes has a positive effect, economic uncertainties in both regimes have a negative effect and economic sanctions in both regimes have a negative effect on real MONEY DEMAND. Furthermore, the results of the forecast indicated that the ANN method has a higher predictive capability in comparison with Markov Switching Model.

Iran’ s economy is recognizes as a high inflationary country (For near almost all years after Islamic revelation) which is suffered to external shocks such as external conflict interactions (for example war and sanctions) and oil price shocks. Therefore، analysis and estimation of MONEY DEMAND in Iran should consider above issues in order to have efficient MONEY supply policy. This paper، apply HSE index to estimate the effects of external conflict interactions. Hodrick-Prescott filter has been used to estimate expected inflation. The MONEY DEMAND FUNCTION of modified Cagan’ s is estimated during 1979 to 2013 by ARIMAX and VAR methods. The results show that، expected inflation by 3 lags، has negative effect on MONEY DEMAND but external conflict interactions by two lags and oil price has positive effects on the MONEY DEMAND.