IMPACT OF MONETARY POLICY ON MONETARY ASSETS IN PAKISTAN A Money Multiplier Approach (1980 81 to 1999 2000)
Monetary policy plays an important role in achieving sustained economic growth. Researchers have tried to examine various issues related to monetary policy in developed countries. Several studied have been carried out to identify the major determinant of stock of money. However, a little research has been conducted to analyze the level of stock of money by using the money multiplier approach. In Pakistan, monetary policy is designed to control total monetary assets keeping in view the projected growth rate of GDP, monetization of the economy and likely surplus or deficit in the country's external account. The objective of this paper is to ascertain the monetary policy in controlling the total monetary assets by analyzing the behaviour of the money multiplier. The findings of this study show that the monetary base remained an importaint determinant of the monetary stock (M2) and the monetary policy remained an effective instrument in controlling and regulating monetary assets in Pakistan.