Está en la página 1de 7

Money Banking & Financial Markets Assignment

Group number 9 2009B3A4616P 2009B3TS871P 2009B3A7560P 2009B3A4537P 2009B3A3587P NITISH BHARGAVA PRAKHAR BHARGAVA PRAKASH YADAV SUHAS KARANTH SAUMYA VIJ

Factors
Money:
Money here is taken to be narrow money since time deposits do not affect the other two factors. It includes money with the public, Other deposits with RBI and Demand deposits and is often represented as M1. The data for Narrow Money was obtained from Table 45: Average Monetary Aggregates provided by annual publication by RBI. The data spans annual values from 1960-61 to 2010-11.

Price Level
The Wholesale Price Index (WPI) is the price of a representative basket of wholesale goods and therefore is considered a good measure for the price level of the economy. The data for WPI was taken from Table 39: Wholesale Price Index - Annual Average (All commodities) from annual publication by RBI and entirely converted to base year 2004-05. The data spans annual values from 1960-61 to 2010-11.

DATA Year
1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980

Money Supply (in Crores)


2720 2869 3049 3317 3752 4080 4529 4951 5350 5779 6536 7374 8323 9700 11200 11975 13325 16024 14388 17292 20000

WPI
4.15 4.25 4.4 4.56 5.03 5.45 6.1 7.01 6.98 7.13 7.57 7.95 8.65 10.07 12.94 13.45 13.18 14.18 14.15 15.8 18.97

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

23424 24937 28535 33398 39915 44095 51516 58555 66786 81060 92892 114406 124066 150778 192257 214835 240615 267844 309068 341796 379450 422843 473581 578716 649790 826415 967955 1155837 1259707 1489301

21.29 21.81 23.53 25.16 26.33 27.79 29.73 32.32 34.51 37.62 42.7 47.77 51.34 56.75 62.05 64.83 67.77 71.75 74.22 79.09 82.9 84.99 89.6 95.49 100 104.74 109.77 119.3 121.82 133.22

Code for regression analysis


CALENDAR 1960 1 1 ALLOCATE 2010:1 OPEN DATA D:/wpi.dat DATA(FORMAT=free,ORG=OBS) / A OPEN DATA D:/money.dat

DATA(FORMAT=free,ORG=OBS) / B graph(header='WPI',vlabel='Wholesale price index',hlabel='year') 2 #A # constant graph(header='Money Supply',vlabel='Money Supply in Crores',hlabel='year') 2 #B # constant scatterplot(header='Money Supply vs WPI',vlabel='WPI',hlabel='Money supply in crores') 1 #BA linreg A #constant B linreg B #constant A

Output

Graph 1

Graph 2

Graph 3

Linear Regression - Estimation by Least Squares Dependent Variable B Annual Data From 1960:01 To 2010:01 Usable Observations 51 Degrees of Freedom 49

Centered R**2

0.827145

R Bar **2 0.823617 T x R**2 44.571

Uncentered R**2 0.873937 Mean of Dependent Variable

213351.09804

Std Error of Dependent Variable 353672.72093 Standard Error of Estimate Sum of Squared Residuals Regression F(1,49) Significance Level of F Durbin-Watson Statistic 148535.25039 1.08107e+12 234.4745 0.00000000 0.069019

Variable

Coeff

Std Error

T-Stat

Signif

****************************************************************************** * 1. Constant 2. A -141702.7692 31148.7380 8492.6775 554.6216 -4.54923 0.00003559

15.31256 0.00000000

Regression Analysis:
Degrees of Freedom = 49 (51 2) as we have 51 observations and 2 parameters for each regression. For linear regression between WPI and Money supply R Bar **2 = 0.823617 which means that shows that the change in WPI is significant to an extent of 82.36% due to a corresponding change in money supply. Durbin-Watson Statistic: 0.069019 which is less than 0.2. So, WPI and money supply are not auto correlated. Equation of regression: WPI = -141702.7692 + 8492.6775 (Money supply)

Analysis:
Money supply is regulated by RBI in India which is the central bank of India. It has various instruments like CRR, repo & reverse repo etc. Its decision on these rates determines inflation, growth and GDP. Through our graphs, weve seen that money supply and WPI has positive relationship with time. That is, both have increased with time. Inflation rates and GDP figures have a direct impact on the money supply since their increase and decrease determines the level of circulating money in the system as and when required by the Central Bank. As the graph 3 shows, as money supply increase, even inflation rate increases. Its been consistent for 50 years. The regression analysis depicts the same. Through our regression analysis we have come to conclude that money supply have a significant impact on the changes in Inflation rate observed over a period of 50 years in this project work. The regression values are highly significant in explaining the relationship between the dependent and independent variables.

También podría gustarte