IDEAS home Printed from https://ideas.repec.org/a/tpr/restat/v75y1993i3p524-30.html
   My bibliography  Save this article

Financial Innovation and Money Demand: Application to Chile and Mexico

Author

Listed:
  • Arrau, Patricio
  • De Gregorio, Jose

Abstract

This paper reexamines one estimation of money demand equations using quarterly data for Chile and Mexico. The authors find no evidence of cointegration of traditional long-run money demand equations. In light of this evidence, they argue that there is an important permanent component of the demand for money not captured by traditional variables (interest rates and income). The authors call this phenomenon financial innovation and they include it in the traditional specification by assuming that it follows a random walk. Copyright 1993 by MIT Press.

Suggested Citation

  • Arrau, Patricio & De Gregorio, Jose, 1993. "Financial Innovation and Money Demand: Application to Chile and Mexico," The Review of Economics and Statistics, MIT Press, vol. 75(3), pages 524-530, August.
  • Handle: RePEc:tpr:restat:v:75:y:1993:i:3:p:524-30
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0034-6535%28199308%2975%3A3%3C524%3AFIAMDA%3E2.0.CO%3B2-8&origin=bc
    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 search for a different version of it.

    References listed on IDEAS

    as
    1. Cooley, Thomas F & Prescott, Edward C, 1973. "Tests of an Adaptive Regression Model," The Review of Economics and Statistics, MIT Press, vol. 55(2), pages 248-256, May.
    2. Arrau, Patricio & De Gregorio, Jose & Reinhart, Carmen M. & Wickham, Peter, 1995. "The demand for money in developing countries: Assessing the role of financial innovation," Journal of Development Economics, Elsevier, vol. 46(2), pages 317-340, April.
    3. Cooley, Thomas F & Prescott, Edward C, 1973. "An Adaptive Regression Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(2), pages 364-371, June.
    4. Mankiw, N Gregory & Summers, Lawrence H, 1986. "Money Demand and the Effects of Fiscal Policies," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 18(4), pages 415-429, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Arrau, Patricio & De Gregorio, Jose & Reinhart, Carmen M. & Wickham, Peter, 1995. "The demand for money in developing countries: Assessing the role of financial innovation," Journal of Development Economics, Elsevier, vol. 46(2), pages 317-340, April.
    2. Sophocles N. Brissimis & Eugenie N. Garganas & Stephen G. Hall, 2014. "Consumer credit in an era of financial liberalization: an overreaction to repressed demand?," Applied Economics, Taylor & Francis Journals, vol. 46(2), pages 139-152, January.
    3. Moses C. Kiptui, 2014. "Some Empirical Evidence on the Stability of Money Demand in Kenya," International Journal of Economics and Financial Issues, Econjournals, vol. 4(4), pages 849-858.
    4. Armando Rodríguez Zerpa, José U. Mora Mora, 2013. "La demanda de dinero y las innovaciones financieras en Venezuela: equilibrio de largo plazo," REVISTA CIFE, UNIVERSIDAD SANTO TOMÁS, June.
    5. Sanchez-Fung, Jose R, 2003. "Inflation targeting and monetary analysis in Chile and Mexico," Royal Economic Society Annual Conference 2003 179, Royal Economic Society.
    6. Verónica Mies M. & Raimundo Soto M., 2000. "Money Demand: Theory, Evidence, Results," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 3(3), pages 5-32, December.
    7. Sanchez-Fung, Jose R., 2002. "Inflation targeting and monetary analysis in Chile and Mexico," Economics Discussion Papers 2002-7, School of Economics, Kingston University London.
    8. Lydia Ndirangu & Esman Morekwa Nyamongo, 2015. "Financial Innovations and Their Implications for Monetary Policy in Kenya," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 24(suppl_1), pages 46-71.
    9. J Paul Dunne and Elizabeth Kasekende, 2016. "Financial Innovation and Money Demand: Evidence from Sub-Saharan Africa," Working Papers 583, Economic Research Southern Africa.
    10. Raimundo Soto M. & Matías Tapia G., 2000. "Seasonal Cointegration in Money Demand," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 3(3), pages 57-71, December.
    11. Loviscek, Anthony L., 1996. "Seigniorage and the Mexican financial crisis," The Quarterly Review of Economics and Finance, Elsevier, vol. 36(1), pages 55-64.
    12. repec:hrs:journl:v:ix:y:2017:i:2:p:29-37 is not listed on IDEAS
    13. repec:spr:jecfin:v:41:y:2017:i:2:d:10.1007_s12197-016-9358-6 is not listed on IDEAS
    14. Hyunjoo Ryou & Cristina Terra, 2015. "Exchange Rate Dynamics under Financial Market Frictions," THEMA Working Papers 2015-03, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    15. Choudhry Taufiq, 2002. "Financial Innovations And Demand For United States M1 And M2 Components," International Economic Journal, Taylor & Francis Journals, vol. 16(1), pages 73-93.
    16. repec:pra:mprapa:40579 is not listed on IDEAS
    17. Singh, Sunny Kumar, 2016. "Currency demand stability in the presence of seasonality and endogenous financial innovation: Evidence from India," MPRA Paper 71552, University Library of Munich, Germany.
    18. Christian Ferrada K. & Mario Tagle E., 2014. "Estimación Reciente de la Demanda de Dinero en Chile," Notas de Investigación Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 17(3), pages 86-109, December.
    19. Raimundo Soto, "undated". "Nonlinearities in the Demand for money: A Neural Network Approach," ILADES-Georgetown University Working Papers inv107, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
    20. L. Arnaut, Javier, 2008. "Demanda de dinero y liberalizacion financiera en Mexico: Un enfoque de cointegracion
      [Money demand and financial liberalization in Mexico: A cointegration approach]
      ," MPRA Paper 8680, 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:75:y:1993:i:3:p:524-30. 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: (Kristin Waites). General contact details of provider: http://mitpress.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 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.

    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.