The application of Bayesian methods in selecting factors affecting the demand for money in Iran

December 31, 2022Financial Economics فصلنامه اقتصاد مالیOpen Access

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Key Points

This research aims to identify and analyze the main factors affecting the demand for money in Iran using Bayesian methods.
Analyzed annual time series data from 1982 to 2020 to identify factors influencing money demand.
Employed five Bayesian methods: BMA, BVS, BAS, WALS, and V-SELECT for robustness in selection of influencing factors.
Modeled variables include interest rate spread, real GDP, and price adjustment index.
The fourth lag of the interest rate spread is identified as the most significant factor affecting money demand in Iran.
The third lag of real GDP positively influences money demand, ranking as the second important factor.
Negative correlation found between the price adjustment index and money demand.

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Analyzes factors affecting money demand in Iran, suggesting key variables for policy implementation.

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hatamrad et al. (2022) studied this question.

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