Effects of higher order interaction in money supply of a country

Rajan Supramaniam (2007) Effects of higher order interaction in money supply of a country. Universiti Malaysia Sabah. (Unpublished)


Download (1MB) | Preview


The money supply of a country is a very crucial aspect to be studied because it affects the whole workings of a country. The main purpose of this research is mainly to obtain the best model to decide the factors that influence the money supply of a country. The model will help the government to decide how much money is to be in circulation in future. In this research, the multiple regressions method is used to obtain the selected model. Then, the eight model selection criteria will be used to gain the best model. The interaction factor affecting the money supply is taken into consideration. Analysis up to the fifth order of interaction is considered. While the analysis is carried out, the model selected is analysed to see the effects and trends of the interaction. So, this research can show the characteristics of the variables and the significance of the higher order interaction variables. The best model is obtained and the significant variables include the highest order of interaction variable which is the fifth order interaction. By using the best model, a forecast will be carried out to predict the money supply. The forecast obtained is overestimating the money supply. It seems to have a relative deviation from the real value where it deviates about 5% from the real value. It shows that the forecast does not deviate too far from the real value. The results which are overestimated can be accepted in the money supply sector. This is because an overestimation of money supply provides a positive environment for the country which shows that the country is rich. So, the model obtained is a good model and it can be used in forecasting the money supply

Item Type: Academic Exercise
Keyword: money supply, multiple regressions method, forecasting, interaction
Subjects: H Social Sciences > HB Economic theory. Demography
Department: SCHOOL > School of Science and Technology
Date Deposited: 01 Apr 2014 15:28
Last Modified: 10 Oct 2017 16:53
URI: https://eprints.ums.edu.my/id/eprint/8036

Actions (login required)

View Item View Item