Demanda de dinero y liberalizacion financiera en Mexico: Un enfoque de cointegracion
[Money demand and financial liberalization in Mexico: A cointegration approach]
AbstractThis paper examines the long run dynamics of Mexico’s money demand using Johansen’s cointegration approach with different specifications. The empirical evidence indicates that real balances, real income and the interest rate are cointegrated in all subperiods. The findings suggest that recent changes in economic policy through financial liberalization affected money demand functions; this due to the fact that income elasticity fell down during the transition through the subperiods, but simultaneously this did not affect the functional stability. The cointegrated coefficient on currency-money ratio (M0/M1) suggests that when the ratio falls, the demand for money falls too. Nevertheless, this last evidence is statistically weak. In addition, it was determined that alternative equations are not better than the conventional ones.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 8680.
Date of creation: 2008
Date of revision:
Money demand; financial liberalization; cointegration; error correction mechanism; currency-money ratio; Mexico;
Find related papers by JEL classification:
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-05-17 (All new papers)
- NEP-MAC-2008-05-17 (Macroeconomics)
- NEP-MON-2008-05-17 (Monetary Economics)
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