Monetary Aggregation And Liquidity Puzzle: Evidence From Pakistan
Author: Rabia Sultana

This paper attempts to check either Liquidity Puzzle exists or not in case of Pakistan using the annual data over the period 1970-2019. In the past, many researchers found the positive relationship between monetary aggregates and interest rate due to the use of monetary aggregates such as non-borrowed reserves, monetary base, narrow money and broad money. This research uses one functional approach (M2) and three different types of empirical approaches to measure the monetary aggregate by using Standard Vector Autoregressive Model. Both these approaches show the presence of Liquidity Puzzle but the Divisia Monetary Aggregate also shows the negative correlation at the end. Supervisor:- Dr. Ahsan Ul Haq Satti

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Supervisor: Ahsan ul Haq Satti

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