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Broad money demand and financial liberalization in Greece

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  • Sunil Sharma

    ()
    (Research Department, International Monetary Fund, 700 - 19th Street, N.W., Washington, DC 20431, USA)

  • Neil R. Ericsson

    ()
    (Stop 24, Division of International Finance, Federal Reserve Board, 2000 C Street, N.W., Washington, DC 20551, USA)

Abstract

This paper develops a constant, data-coherent, equilibrium correction model for broad money demand (M3) in Greece over 1976-1994. The aggregate M3 was targeted until recently, and current monetary policy still uses such aggregates as guidelines. In spite of financial innovation, financial liberalization, and large fluctuations in the inflation rate, the estimated model is remarkably stable. Dynamics are important, with price and income elasticities being much smaller in the short run than in the long run. The model provides a better understanding of the portfolio consequences of financial innovation and the effects of monetary policy in Greece.

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Bibliographic Info

Article provided by Springer in its journal Empirical Economics.

Volume (Year): 23 (1998)
Issue (Month): 3 ()
Pages: 417-436

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Handle: RePEc:spr:empeco:v:23:y:1998:i:3:p:417-436

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Related research

Keywords: Cointegration · equilibrium correction · financial innovation · Greece · money demand;

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References

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Citations

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Cited by:
  1. Matei Demetrescu & Helmut L�tkepohl & Pentti Saikkonen, 2009. "Testing for the cointegrating rank of a vector autoregressive process with uncertain deterministic trend term," Econometrics Journal, Royal Economic Society, vol. 12(3), pages 414-435, November.
  2. Ge Wu, 2009. "Broad Money Demand and Asset Substitution in China," IMF Working Papers 09/131, International Monetary Fund.
  3. Stephen Dobson & Carlyn Ramlogan, 2001. "Money Demand and Economic Liberalization in a Small Open Economy—Trinidad and Tobago," Open Economies Review, Springer, vol. 12(3), pages 325-339, July.
  4. Wei Liao & Sampawende J.-A. Tapsoba, 2014. "China’s Monetary Policy and Interest Rate Liberalization: Lessons from International Experiences," IMF Working Papers 14/75, International Monetary Fund.
  5. Maghyereh, Aktham, 2003. "Financial Liberalization and Stability Demand for Money in Emerging Economies: Evidence from Jordan," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 3(2).
  6. Loizos, Konstantinos & Thompson, John, 2001. "The Demand for Money in Greece 1962 to 1998," MPRA Paper 54035, University Library of Munich, Germany.
  7. Darrat, Ali F. & Al-Sowaidi, Saif S., 2009. "Financial progress and the stability of long-run money demand: Implications for the conduct of monetary policy in emerging economies," Review of Financial Economics, Elsevier, Elsevier, vol. 18(3), pages 124-131, August.
  8. Lazea, Valentin & Cozmanca, Bogdan Octavian, 2003. "Currency substitution in Romania," MPRA Paper 19813, University Library of Munich, Germany.
  9. Defne Mutluer & Yasemin Barlas, 2002. "Modeling the Turkish Broad Money Demand," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 2(2), pages 55-75.
  10. Yannis Panagopoulos & Aristotelis Spiliotis, 2006. "Testing Money Supply Endogeneity: The Case of Greece (1975-1998)," European Research Studies Journal, European Research Studies Journal, vol. 0(1-2), pages 85-102.
  11. Ozge Akinci, 2003. "Modeling the Demand for Currency Issued in Turkey," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 3(1), pages 1-25.
  12. Sriram, Subramanian S., 2002. "Determinants and stability of demand for M2 in Malaysia," Journal of Asian Economics, Elsevier, vol. 13(3), pages 337-356.
  13. Nina Budina & Wojtek Maliszewski & Georges de Menil & Geomina Turlea, 2002. "Money, Inflation and output in Romania, 1992-2000," DELTA Working Papers 2002-15, DELTA (Ecole normale supérieure).
  14. Avouyi-Dovi, S. & Diop, A. & Fonteny, E-C. & Gervais, E. & Jacquinot, P. & Mésonnier, J-S. & Sahuc, J-G., 2003. "Estimation d’une fonction de demande de monnaie pour la zone euro : une synthèse des résultats," Bulletin de la Banque de France, Banque de France, Banque de France, issue 111, pages 47-72.
  15. Khan, Muhammad Arshad & Sajjid, Muhammad Zabir, 2005. "The Exchange Rates and Monetary Dynamics in Pakistan: An Autoregressive Distributed Lag (ARDL) Apporach," MPRA Paper 6752, University Library of Munich, Germany.
  16. Sanvi Avouyi-Dovi & Françoise Drumetz & Jean-Guillaume Sahuc, 2007. "The money demand function for the Euro area: one step beyond," Documents de recherche, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne 07-08, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
  17. Mohsen Bahmani-oskooee & Charikleia Economidou, 2005. "How stable is the demand for money in Greece?," International Economic Journal, Taylor & Francis Journals, Taylor & Francis Journals, vol. 19(3), pages 461-472.
  18. Neil R. Ericsson & David F. Hendry & Kevin M. Prestwich, 1997. "The demand for broad money in the United Kingdom, 1878-1993," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 596, Board of Governors of the Federal Reserve System (U.S.).
  19. Subramanian S. Sriram, 1999. "Survey of Literatureon Demand for Money," IMF Working Papers 99/64, International Monetary Fund.
  20. Tsionas, Efthymios G., 2001. "P-STAR analysis in a converging economy: the case of Greece," Economic Modelling, Elsevier, vol. 18(1), pages 49-60, January.
  21. Christos Karpetis, 2008. "Money, Income and Inflation in Equilibrium – The Case of Greece," International Advances in Economic Research, International Atlantic Economic Society, vol. 14(2), pages 205-214, May.

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