IDEAS home Printed from https://ideas.repec.org/a/tpr/restat/v69y1987i3p473-80.html
   My bibliography  Save this article

International Evidence on the Demand for Money

Author

Listed:
  • 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.

Suggested Citation

  • 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
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0034-6535%28198708%2969%3A3%3C473%3AIEOTDF%3E2.0.CO%3B2-G&origin=repec
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Hendry, David F. & Pagan, Adrian R. & Sargan, J.Denis, 1984. "Dynamic specification," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 18, pages 1023-1100, Elsevier.
    2. Rik Hafer & Scott E. Hein, 1980. "The dynamics and estimation of short-run money demand," Review, Federal Reserve Bank of St. Louis, vol. 62(Mar), pages 26-35.
    3. Rik Hafer, 1985. "Monetary stabilization policy: evidence from money demand forecasts," Review, Federal Reserve Bank of St. Louis, vol. 67(May), pages 21-26.
    4. Hwang, Hae-shin, 1985. "Test of the Adjustment Process and Linear Homogeneity in a Stock Adjustment Model of Money Demand," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 689-692, November.
    5. Stephen M. Goldfeld, 1973. "The Demand for Money Revisited," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 4(3), pages 577-646.
    6. Daniel L. Thornton, 1985. "Money demand dynamics: some new evidence," Review, Federal Reserve Bank of St. Louis, vol. 67(Mar), pages 14-23.
    7. Andrews, Donald W. K. & Fair, Ray C., 1987. "Inference in Econometric Models with Structural Change," Working Papers 636, California Institute of Technology, Division of the Humanities and Social Sciences.
    8. Fair, Ray C, 1970. "The Estimation of Simultaneous Equation Models with Lagged Endogenous Variables and First Order Serially Correlated Errors," Econometrica, Econometric Society, vol. 38(3), pages 507-516, May.
    9. Spencer, David E, 1985. "Money Demand and the Price Level," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 490-496, August.
    10. Gregory C. Chow, 1966. "On the Long-Run and Short-Run Demand for Money," Journal of Political Economy, University of Chicago Press, vol. 74, pages 111-111.
    11. Milbourne, Ross, 1983. "Price Expectations and the Demand for Money: Resolution of a Paradox," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 633-638, November.
    12. Stephen M. Goldfeld, 1976. "The Case of the Missing Money," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(3), pages 683-740.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tin, Jan, 1999. "Short-run and long-run demand for financial assets A microeconomic perspective," International Review of Economics & Finance, Elsevier, vol. 8(4), pages 467-478, November.
    2. Tin, Jan, 1999. "The impacts of racial differences on demand for financial assets," International Review of Financial Analysis, Elsevier, vol. 8(3), pages 269-282, March.
    3. Carr, Jack & Darby, Michael R., 1981. "The role of money supply shocks in the short-run demand for money," Journal of Monetary Economics, Elsevier, vol. 8(2), pages 183-199.
    4. Akhand Akhtar Hossain, 2009. "Central Banking and Monetary Policy in the Asia-Pacific," Books, Edward Elgar Publishing, number 12777.
    5. Alexi Thompson & Henry Thompson, 2021. "Six decades of inflation and money demand," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 45(2), pages 240-251, April.
    6. Erwin W. Heri, 1988. "Money Demand Regressions and Monetary Targeting Theory and Stylized Evidence," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 124(II), pages 123-149, June.
    7. Yu Hsing, 2007. "Currency Substitution, Capital Mobility and Functional Forms of Money Demand in Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 12(1), pages 35-48, Jan-Jun.
    8. Neil R. Ericsson, 2000. "Predictable uncertainty in economic forecasting," International Finance Discussion Papers 695, Board of Governors of the Federal Reserve System (U.S.).
    9. Muritala Taiwo, 2012. "The Implication of Effectiveness of Demand for Money on Economic Growth," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 1(1), pages 34-48, March.
    10. Michael Bordo & Anna J. Schwartz, 2006. "David Laidler on Monetarism," NBER Working Papers 12593, National Bureau of Economic Research, Inc.
    11. Yu Hsing, 2007. "The roles of the exchange rate and the foreign interest rate in Estonia's money demand function and policy implications," Applied Financial Economics Letters, Taylor and Francis Journals, vol. 3(4), pages 221-224.
    12. Palley, Thomas I., 1995. "The demand for money and non-GDP transactions," Economics Letters, Elsevier, vol. 48(2), pages 145-154, May.
    13. C. P. Barros & João Ricardo Faria & Luis A. Gil-Alana, 2017. "The demand for money in Angola," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 41(2), pages 408-420, April.
    14. Hendry, David F. & Ericsson, Neil R., 1991. "Modeling the demand for narrow money in the United Kingdom and the United States," European Economic Review, Elsevier, vol. 35(4), pages 833-881, May.
    15. Yu Hsing, 2007. "Impacts of the exchange rate and the foreign interest rate on the Argentine money demand function," Applied Economics Letters, Taylor & Francis Journals, vol. 15(1), pages 35-39.
    16. Neil R. Ericsson, 2001. "Forecast uncertainty in economic modeling," International Finance Discussion Papers 697, Board of Governors of the Federal Reserve System (U.S.).
    17. Greene, Clinton A., 2002. "Was money demand in the USA unstable before 1982? An application of the sup-F stability test," Journal of Economics and Business, Elsevier, vol. 54(5), pages 465-481.
    18. Daniel L. Thornton, 1985. "Money demand dynamics: some new evidence," Review, Federal Reserve Bank of St. Louis, vol. 67(Mar), pages 14-23.
    19. Yu Hsing, 2006. "Tests of Functional Forms, Currency Substitution, and Capital Mobility of Czech Money Demand Function," Prague Economic Papers, Prague University of Economics and Business, vol. 2006(4), pages 291-299.
    20. Bhatta, Siddha Raj, 2011. "Stability of demand for money function in Nepal: A cointegration and error correction modeling approach," MPRA Paper 41404, University Library of Munich, Germany.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tpr:restat:v:69:y:1987:i:3:p:473-80. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://direct.mit.edu/journals .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ann Olson (email available below). General contact details of provider: https://direct.mit.edu/journals .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.