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Demand for Money, Economic Policies, and Stability

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  • Amir Kia

Abstract

This study identifies Canadian fiscal and monetary policy regime changes that could influence the services of money. It is argued that if these policy regime changes are not incorporated in the estimation of demand for real balances the result would be biased and unstable. Using Canadian monthly data for the January 1975 to June 2001 period, the paper estimates two demand-for-money (M1) functions. It was found the demand for money in Canada is stable over the short- and long-run periods when these policy regime changes are incorporated and the estimated coefficients have correct signs.

Suggested Citation

  • Amir Kia, 2002. "Demand for Money, Economic Policies, and Stability," Emory Economics 0211, Department of Economics, Emory University (Atlanta).
  • Handle: RePEc:emo:wp2003:0211
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