Financial Liberalization and Stability Demand for Money in Emerging Economies: Evidence from Jordan

The main purpose of this paper is to test empirically whether there exists a stable function of demand for broad money in Jordan over the period 1976-2000. Despite the substantial financial market liberalization in the late of 1988, the co integration and error correction methodology shows that the quarterly time-series data confirms that the broad demand for money in Jordan was stable during the period under investigation. The results also show that the inflation rate is the most important variable that explains the demand for money in the Jordanian economy.