The existence of a stable demand function for M2 in Korea is important for the conduct of monetary policy and financial analysis. However, despite much research into the subject, results thus far yield no conclusion as to whether M2 demand is in fact stable. Previous studies, however, have failed to adequately control for financial innovation. When adding a proxy for such innovation to the coin...

analysis of the transactions demand formoney. The commodity-demand elasticity withrespect to the real interest rate, b , , was set tounity because, of all (equally arbitrary) values,unity is the most straightforward choice. (Econo-metric evidence currently available does notprovide direct knowledge of this elasticity.) Therelative sizes of the disturbances give consi...

Money demand in Venezuela is modeled using structural time series and error correction approaches, for the period 1993.1 to 2001.4. The preferred model features seasonal cointegration and was estimated following a structural time series approach. There are similarities in the long-run behavior of money demand associated with the structural time series and error correction approaches. Estimated ...

Much of the conventional wisdom stems from Friedman’s (1968a; 1968b) informal discussions and Cagan’s (1972) reduced-form evidence on how nominal interest rates respond to a permanent change in money growth. According to that wisdom, the interest rate response is broken into a “short-run,” a “medium-run,” and a “long-run” response. In the short run, when wages, prices, and portfolios do not adj...