IDEAS home Printed from https://ideas.repec.org/p/fip/fedgif/567.html
   My bibliography  Save this paper

Financial innovation and the speed of adjustment of money demand: evidence from Bolivia, Israel, and Venezuela

Author

Listed:
  • Martina Copelman

Abstract

Traditional studies of money demand for both developed and less developed countries have shown that there are periods of "missing money," that is, there is consistent overprediction of real balances. This paper uses cointegration techniques to study the effects of financial innovation on the demand for real balances in Bolivia, Israel, and Venezuela. The results show that financial innovation can account for the instability of money demand observed in these countries. In particular, I find that the long run demand for real balances shifted down. In addition, I show that the speed at which people adjust their demand for money when out of equilibrium increases following financial innovation.

Suggested Citation

  • Martina Copelman, 1996. "Financial innovation and the speed of adjustment of money demand: evidence from Bolivia, Israel, and Venezuela," International Finance Discussion Papers 567, Board of Governors of the Federal Reserve System (U.S.).
  • Handle: RePEc:fip:fedgif:567
    as

    Download full text from publisher

    File URL: http://www.federalreserve.gov/pubs/ifdp/1996/567/default.htm
    Download Restriction: no

    File URL: http://www.federalreserve.gov/pubs/ifdp/1996/567/ifdp567.pdf
    Download Restriction: no

    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. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
    3. John Y. Campbell & Pierre Perron, 1991. "Pitfalls and Opportunities: What Macroeconomists Should Know About Unit Roots," NBER Chapters,in: NBER Macroeconomics Annual 1991, Volume 6, pages 141-220 National Bureau of Economic Research, Inc.
    4. Perron, Pierre, 1988. "Trends and random walks in macroeconomic time series : Further evidence from a new approach," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 297-332.
    5. Hafer, R W & Jansen, Dennis W, 1991. "The Demand for Money in the United States: Evidence from Cointegration Tests," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 23(2), pages 155-168, May.
    6. Phillips, P.C.B., 1986. "Understanding spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 33(3), pages 311-340, December.
    7. Engle, Robert F. & Yoo, Byung Sam, 1987. "Forecasting and testing in co-integrated systems," Journal of Econometrics, Elsevier, vol. 35(1), pages 143-159, May.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Bolivia ; Israel ; Money ; Venezuela;

    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:fip:fedgif:567. 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: (Franz Osorio). General contact details of provider: http://edirc.repec.org/data/frbgvus.html .

    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.