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International Evidence on the Demand for Money

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  • Fair, Ray C

Abstract

One of the current questions in the literature on the demand for money is whethe r the adjustment of actual to desired money holdings is in nominal or real terms. This paper describes a simple procedure that can be used to test the nominal against the real hypothesis. The test is carried out for twenty-seven countries. The paper also tests the structural stability of the demand for money equations and the correctness of th e dynamic specification. The results are strongly in favor of the nom inal-adjustment hypothesis. There is, however, some evidence of moder ate structural instability before and after 1973. The instability doe s not affect the conclusion that the nominal-adjustment hypothesis do minates the real adjustment hypothesis. Copyright 1987 by MIT Press.

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  • Fair, Ray C, 1987. "International Evidence on the Demand for Money," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 473-480, August.
    • Handle: RePEc:tpr:restat:v:69:y:1987:i:3:p:473-80
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    9. Rik Hafer, 1985. "Monetary stabilization policy: evidence from money demand forecasts," Review, Federal Reserve Bank of St. Louis, vol. 67(May), pages 21-26.
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