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The Demand for Money in Transition Economies


  • Ozturk, Ilhan

    () (Faculty of Economics and Administrative Sciences, Cag University, 33800, Mersin, Turkey.)

  • Acaravci, Ali

    () (Faculty of Economics and Administrative Sciences, Mustafa Kemal University, Antakya-Hatay, Turkey)


This paper examines the long-run determinants of the demand for money in ten transition countries using panel data for the 1994-2005 period. Using panel unit root tests we rejected the the null hypothesis of the nonstationarity and employed the feasible generalized least squares (FGLS) model. Consistent with theoretical postulates, it is found that (a) the demand for money in the long-run positively responds to real GDP and inversely to the inflation and the real effective exchange rate and (b) the long-run income elasticity is about unity.

Suggested Citation

  • Ozturk, Ilhan & Acaravci, Ali, 2008. "The Demand for Money in Transition Economies," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 5(2), pages 35-43, June.
  • Handle: RePEc:rjr:romjef:v:5:y:2008:i:2:p:35-43

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    References listed on IDEAS

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    Cited by:

    1. 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.

    More about this item


    demand for money; transition economies; panel unit root test; feasible GLS;

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models


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