Long- and short-run determinants of the demand for money in New Zealand: A cointegration analysis
The existence of a stable demand for money is very important for the conduct of monetary policy even in this new era of inflation targeting. This paper examines the long-run determinants of the demand for M3 in New Zealand employing the Johansen cointegration technique and quarterly data for the period 1988: 1-2002: 2- The paper finds, inter alia, that the demand for money is cointegrated with real income, the spread between interest on money and on non-money assets, the expected rate of inflation, and the real effective, (trade weighted index) exchange rate.
Volume (Year): 36 (2002)
Issue (Month): 2 ()
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