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The Stability of Money Demand: Some Evidence from Turkey

Author

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  • Chaido Dritsaki
  • Melina Dritsaki

Abstract

Demand for money is an important macroeconomic relationship. Its stability has implications for the choice of monetary policy targets. The current study examines the stability of money demand function in Turkey from January 1989 to May 2010. More specifically, it estimates the demand for narrow money in Turkey and evaluates its robustness and stability. Considering the economic reforms and financial crises in Turkey, it is found that there exists a well determined instability for money demand and its dynamics, which is adequately captured by cointegration and error correction models. Finally, the conclusions from the estimation of the impulse response functions show that interest rate causes the largest shift in money demand as well as in industrial production.

Suggested Citation

  • Chaido Dritsaki & Melina Dritsaki, 2012. "The Stability of Money Demand: Some Evidence from Turkey," The IUP Journal of Bank Management, IUP Publications, vol. 0(4), pages 7-28, November.
    • Handle: RePEc:icf:icfjbm:v:11:y:2012:i:4:p:7-28
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    Cited by:

    1. Mahmud A. Mansaray, 2017. "Macroeconomic Determinants of Foreign Direct Investment Inflows and Impulse Response Function," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(10), pages 187-219, October.
    2. 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.
    3. E. Chuke Nwude & K. Onochie Offor & Sergius N. Udeh, 2018. "Determinants and Stability of Money Demand in Nigeria," International Journal of Economics and Financial Issues, Econjournals, vol. 8(3), pages 340-353.
    4. Adnan A. Saed & Walid Al-Shawaqfeh, 2017. "The Stability of Money Demand Function in Jordan: Evidence from the Autoregressive Distributed Lag Model," International Journal of Economics and Financial Issues, Econjournals, vol. 7(5), pages 331-337.
    5. Akhand Akhtar Hossain, 2015. "Central Banking and Monetary Policy in Muslim-Majority Countries," Books, Edward Elgar Publishing, number 14612.
    6. Dorothy Nampewo & Jacob Opolot, 2016. "Financial Innovations and Money Velocity in Uganda," African Development Review, African Development Bank, vol. 28(4), pages 371-382, December.

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