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Economic uncertainty and money demand stability in Turkey

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  • K. Azim Özdemir
  • Mesut Saygılı

Abstract

Purpose - The purpose of this paper is to investigate whether the inclusion of uncertainty variables in the demand for money function can produce a stable relationship in Turkey. Design/methodology/approach - The stability of a money demand function is studied by testing parameter constancy of long‐run money demand function. To this end, the authors perform Nymblom type tests in the context of the Coingtegrated VAR methodology. Findings - The findings show that inclusion of appropriate measure of uncertainty is necessary to estimate a stable and consistent money demand function for Turkey. Originality/value - The empirical application of Nymblom type stability tests on cointegrated VAR money demand systems is very recent and to the authors' knowledge there has been no application of this methodology on emerging market economies. Therefore, this paper extends the literature to the emerging market economies.

Suggested Citation

  • K. Azim Özdemir & Mesut Saygılı, 2013. "Economic uncertainty and money demand stability in Turkey," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 40(3), pages 314-333, July.
  • Handle: RePEc:eme:jespps:v:40:y:2013:i:3:p:314-333
    DOI: 10.1108/01443581311283943
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    Cited by:

    1. Emel Siklar & Ilyas Siklar, 2021. "Is There a Change in the Money Demand Stability in Turkey? A Nonlinear Approach," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 7(2), pages 28-42, 06-2021.
    2. Michael Asiedu & Patrick Bimpong & Thomas Hezkeal Nan Khela & Benedict Arthur, 2021. "Long-Run Money Demand Function: Search for Stability in Twenty (20) Non-EMU Member Countries," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 9(1), pages 58-87, March.
    3. Chelghoum, Amirouche & Boumimez, Fayçal & Alsamara, Mouyad, 2023. "Asymmetric effects of oil price shocks on the demand for money in Algeria," The Quarterly Review of Economics and Finance, Elsevier, vol. 89(C), pages 1-11.

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