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The Demand For Money In Austria

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  • Bernd Hayo

    (ZEI & University of Bonn)

Abstract

In this paper, the demand for real money M1, M2 and M3 is estimated for Austria. 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 a unity elasticity of real GDP. In the case of M2 and M3, we find a unit coefficient on income and a significantly negative influence of an interest rate. The statistical properties of the estimated short-run money demand equations - considering in-sample and out-of-sample (35 observations) tests - are generally very good.

Suggested Citation

  • Bernd Hayo, 1999. "The Demand For Money In Austria," Macroeconomics 9902012, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpma:9902012
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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, March.
    2. Philip Arestis & Malcolm Sawyer, 2001. "Will the Euro Bring Economic Crisis to Europe?," Palgrave Macmillan Books, in: Philip Arestis & Michelle Baddeley & John McCombie (ed.), What Global Economic Crisis?, chapter 5, pages 78-103, Palgrave Macmillan.
    3. Martin Melecky, 2001. "Stabilita dlouhodobe poptavky po siroce definovanych penezich v otevrene ekonomice: pripad CR 1994-2000," Archive of Monetary Policy Division Working Papers 2001/38, Czech National Bank.
    4. Mrtin Melecký, 2002. "Poptávka po penìzích v Èeské republice (M1)," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 52(3), pages 76-89, March.
    5. Martin Melecký, 2002. "Analýza diskrepancí v poptávce po penìzích domácností a firem v ÈR 1994-2000 (èást I: domácnosti)," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 52(7-8), pages 428-449, July.
    6. Nano Prawoto, 2010. "Money demand: a study on the Indonesian influential factors," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 2(3), pages 223-236, April.
    7. Calza, Alessandro & Sousa, João, 2003. "Why has broad money demand been more stable in the euro area than in other economies? A literature review," Working Paper Series 261, European Central Bank.
    8. Abbas Valadkhani, 2005. "Modelling Demand For Broad Money In Australia ," Australian Economic Papers, Wiley Blackwell, vol. 44(1), pages 47-64, March.
    9. Jana Juriová, 2016. "Money Market Equilibrium in the Czech Republic," Prague Economic Papers, Prague University of Economics and Business, vol. 2016(3), pages 321-334.
    10. Saten Kumar & Don J. Webber, 2013. "Australasian money demand stability: application of structural break tests," Applied Economics, Taylor & Francis Journals, vol. 45(8), pages 1011-1025, March.
    11. Lubo Komrek & Martin Meleck, 2004. "Money Demand in an Open Transition Economy," Eastern European Economics, Taylor & Francis Journals, vol. 42(5), pages 73-73, September.
    12. 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.
    13. 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 1-50.
    14. Roberto Golinelli & Sergio Pastorello, 2002. "Modelling the demand for M3 in the Euro area," The European Journal of Finance, Taylor & Francis Journals, vol. 8(4), pages 371-401.

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    More about this item

    Keywords

    money demand monetary economics Austria monetary policy;

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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