Money Demand Predictability

Money demand in Euroland

This paper explores the determinants of alternative monetary aggregates in Euroland. A sample consisting of quarterly data covering the 1980:1–1998:4 period is considered. We are interested whether a conventionally defined money demand equation is stable in some aggregates as opposed to others. Both long-run and short-run relationships are considered in this paper. Overall, the results indicate...

Payment Cards and Money Demand in Belgium

Money Demand and Macroeconomic Stability Revisited1

This paper reexamines the role of money demand for the local dynamics of a sticky price model where money enters the utility function and monetary policy is either conducted according to a Taylor-type interest rate rule or to a Friedman-type constant money growth rule. It is shown that activeness, which is commonly recommended as a device for a stabilizing interest rate policy, leads to stable ...

Is the US Demand for Money Unstable?

The demand for money (M1) for the USA is estimated with annual data from 1960-2008 and its stability is analyzed with the extended Gregory and Hansen (1996b) test. In addition to estimating the canonical specification, alternative specifications are estimated which include a trend and additional variables to proxy the cost of holding money. Results with our extended specification showed that th...

Estimating a European Demand for Money

European Monetary Union will come into existence in 1999. This raises questions related to the monetary policy targets that will be adopted by the European Central Bank (ECB). For both likely candidates, targeting a money aggregate or an inflation target, the existence of a stable money demand function at a European level is important. In this paper estimates of such a European money demand for...