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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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File URL: http://hdl.handle.net/10.1007/s10663-010-9139-y
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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

Related research

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. 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.
  2. 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.

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