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The (in)stability of money demand in the euro area: lessons from a cross-country analysis

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  • Dieter Nautz

    ()

  • Ulrike Rondorf

Abstract

The instability of standard money demand functions has undermined the role of monetary aggregates for monetary policy analysis in the euro area. This paper uses country-specific monetary aggregates to shed more light on the economics behind the instability of euro area money demand. Our results obtained from panel estimation indicate that the observed instability of standard money demand functions could be explained by omitted variables like e.g. technological progress that are important for money demand but constant across member countries.

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Bibliographic Info

Article provided by Springer in its journal Empirica.

Volume (Year): 38 (2011)
Issue (Month): 4 (November)
Pages: 539-553

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Handle: RePEc:kap:empiri:v:38:y:2011:i:4:p:539-553

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Web page: http://www.springerlink.com/link.asp?id=100261

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Keywords: Money demand; Cross-country analysis; Panel error correction model; Euro area; E41; E51; E52;

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References

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Cited by:
  1. Frauke Dobnik, 2011. "OLong-run Money Demand in OECD Countries – Cross-Member Cointegration," Ruhr Economic Papers 0237, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  2. Lee, Chien Chiang & Chang, Chun Ping, 2012. "The Demand for Money in China: A Reassessment Using the Bounds Testing Approach," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 74-94, March.
  3. Ralph Setzer & Guntram Wolff, 2013. "Money demand in the euro area: new insights from disaggregated data," International Economics and Economic Policy, Springer, vol. 10(2), pages 297-315, June.
  4. Clemens Kool & Erik de Regt & Tom van Veen, 2013. "Money Overhang, Credit Overhang and Financial Imbalances in the Euro Area," CESifo Working Paper Series 4476, CESifo Group Munich.

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