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The demand for money in Austria

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  • Bernd Hayo

    ()
    (ZEI, University of Bonn, Walter-Flex-Str. 3, 53113 Bonn, Germany)

Abstract

In this paper, the demand for real money M1, M2, and M3 is estimated for Austria over the time period 1965-96. The modelling takes place within the framework of a small vector autoregression. To estimate the demand for money, two-equation error-correction models are constructed, which contain the short-run dynamics and the long-run economic equilibrium. It is found that a stable money demand exists for all monetary aggregates. The long-run equilibrium of M1, after accounting for a structural break in 1979, can be characterised as a classical type of money demand, with no interest rate effects and an elasticity of one for real GDP. In the case of M2 and M3, we find a unit coefficient on income and a significantly negative influence of a long-term interest rate. The statistical properties of the estimated short-run money demand equations - considering in-sample and out-of-sample tests - are generally very good.

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Bibliographic Info

Article provided by Springer in its journal Empirical Economics.

Volume (Year): 25 (2000)
Issue (Month): 4 ()
Pages: 581-603

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Handle: RePEc:spr:empeco:v:25:y:2000:i:4:p:581-603

Note: received: October 1996/Final version received: April 2000
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Keywords: monetary economics · money demand · Austria · European Monetary Union;

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References

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Citations

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Cited by:
  1. Abbas Valadkhani, 2005. "Modelling Demand For Broad Money In Australia ," Australian Economic Papers, Wiley Blackwell, vol. 44(1), pages 47-64, 03.
  2. Komárek Luboš & Melecký Martin, 2001. "Demand for Money in the Transition Economy : The Case of the Czech Republic 1993–2001," The Warwick Economics Research Paper Series (TWERPS) 614, University of Warwick, Department of Economics.
  3. Philip Arestis & Malcolm Sawyer, 2001. "Will The Euro Bring Economic Crisis to Europe?," Economics Working Paper Archive wp_322, Levy Economics Institute.
  4. Don J. Webber & Saten Kumar, 2011. "Australasian money demand stability:Application of structural break tests," Working Papers 1101, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
  5. Daniela Zapodeanu & Mihail Ioan Cociuba, 2010. "Linking Money Supply With The Gross Domestic Product In Romania," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(12), pages 50.

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