Open Access Article

The Money Market Stability: Exploring the Role of Uncertainty in Pakistan

Authors

Ayza Shoukat(1) Ayza Shoukat Affiliation Lecturer in Economics, Department of Economics, University of Sahiwal, Sahiwal Other articles by this author , Muhammad Abdullah(2) Muhammad Abdullah Corresponding author Affiliation Assistant Professor, Department of Economics, University of Sahiwal, Sahiwal Email addressmabdullah@uosahiwal.edu.pk Other articles by this author

  1. Lecturer in Economics, Department of Economics, University of Sahiwal, Sahiwal
  2. Assistant Professor, Department of Economics, University of Sahiwal, Sahiwal

https://doi.org/10.36923/jcmi.v6i2.632

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Abstract

This study proposes an investigation into the relationship between money demand and economic uncertainty in Pakistan. This study extends the Keynes money demand function by including the optimal uncertainty index and analyzes the impact of uncertainty on the money demand. We employed annual data from 1990-2022 and ARDL for data analysis. We used money demand as the dependent variable, the world uncertainty index for Pakistan as a core explanatory variable, with other control variables. The empirical results indicate the existence of a long-run and direct relationship between uncertainty and money demand in Pakistan. The study also provides valuable implications for policymakers for a stable money market.

Article information

Keywords
Demand for moneyeconomic uncertaintymoney marketinterest rateinflation
Section
Articles
Issue
Vol. 6 No. 2 (2025)
Submitted
June 24, 2025
Accepted
November 29, 2025
Published
December 2, 2025
Corresponding author
Muhammad Abdullah
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