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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.

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Bibliographic Info

Paper provided by EconWPA in its series Macroeconomics with number 9902012.

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Date of creation: 25 Feb 1999
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Handle: RePEc:wpa:wuwpma:9902012

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Keywords: money demand monetary economics Austria monetary policy;

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Citations

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Cited by:
  1. Philip Arestis & Malcolm Sawyer, 2001. "Will the Euro Bring Economic Crisis to Europe?," Macroeconomics, EconWPA 0103003, EconWPA.
  2. 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.
  3. Abbas Valadkhani, 2002. "Modelling Demand for Broad Money in Australia," School of Economics and Finance Discussion Papers and Working Papers Series, School of Economics and Finance, Queensland University of Technology 120, School of Economics and Finance, Queensland University of Technology.
  4. 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.
  5. 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.

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