How justified is abandoning money from monetary policy? Evidence from dynamically simulated ARDL

The stable money demand function is a crucial policy tool of the monetary any central bank, which links sector an economy to its real sector. Notably, after global financial crisis 2007–08, role has come be envisaged as essential issue while formulating and conducting policy, especially at zero lower bound. It know whether for inferring sound policy. To this end, present study examines short- long-run relationship stability in India from 2006:Q3 2019:Q4. employed dynamically simulated autoregressive distributed lag (ARDL) cointegration approach, shows well-specified incorporating inflation forecast variable one determinants along with other covariates. Furthermore, impulse response also supports economic among variables. current finding implies implication terms focusing on aggregate, ongoing flexible targeting framework, information or indicator variables, acts long-term assessment short-term interest rate setting behaviour achieve macroeconomic goals.