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Money Demand in the Netherlands


  • Bob Traa


This paper analyzes the demand for narrow money balances in the Netherlands. Demand for narrow money balances had increased markedly in relation to GNP in the Netherlands throughout the 1980s. This phenomenon could not be explained satisfactorily with traditional Goldfeld-type money demand functions which had performed well until that time. Drawing on advances in dynamic modeling from the error corrections and cointegration literature, and incorporating yield-curve effects and the exchange rate of the guilder with the U.S. dollar as additional monetary indicators significantly improves the performance of money demand estimates.

Suggested Citation

  • Bob Traa, 1991. "Money Demand in the Netherlands," IMF Working Papers 91/57, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:91/57

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    References listed on IDEAS

    1. Lars E. O. Svensson, 2000. "The First Year of the Eurosystem: Inflation Targeting or Not?," American Economic Review, American Economic Association, vol. 90(2), pages 95-99, May.
    2. G. Coenen & J.-L. Vega, 2001. "The demand for M3 in the euro area," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(6), pages 727-748.
    3. Artis, Michael J & Mizen, Paul & Kontolemis, Zenon, 1998. "Inflation Targeting: What Can the ECB Learn from the Recent Experience of the Bank of England?," Economic Journal, Royal Economic Society, vol. 108(451), pages 1810-1825, November.
    4. Brand, Claus & Cassola, Nuno, 2000. "A money demand system for euro area M3," Working Paper Series 0039, European Central Bank.
    5. M.F. Bryan & S.G. Cecchetti & R. O'Sullivan, 2001. "Asset Prices in the Measurement of Inflation," DNB Staff Reports (discontinued) 62, Netherlands Central Bank.
    6. Monticelli, Carlo & Strauss-Kahn, Marc-Olivier, 1993. "European Integration and the Demand for Broad Money," The Manchester School of Economic & Social Studies, University of Manchester, vol. 61(4), pages 345-366, December.
    7. Cassola, Nuno & Morana, Claudio, 2004. "Monetary policy and the stock market in the euro area," Journal of Policy Modeling, Elsevier, vol. 26(3), pages 387-399, April.
    8. Davidson, James E H, et al, 1978. "Econometric Modelling of the Aggregate Time-Series Relationship between Consumers' Expenditure and Income in the United Kingdom," Economic Journal, Royal Economic Society, vol. 88(352), pages 661-692, December.
    9. Joaquim Vieira Ferreira Levy & Alessandro Calza & Dieter Gerdesmeier, 2001. "Euro Area Money Demand; Measuring the Opportunity Costs Appropriately," IMF Working Papers 01/179, International Monetary Fund.
    10. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    11. Benedict J. Clements & Zenon Kontolemis & Joaquim Vieira Ferreira Levy, 2001. "Monetary Policy Under EMU; Differences in the Transmission Mechanism?," IMF Working Papers 01/102, International Monetary Fund.
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    Cited by:

    1. Valadkhani, Abbas, 2006. "What Determines the Demand for Money in the Asian-Pacific Countries? An Empirical Panel Investigation," Economics Working Papers wp06-11, School of Economics, University of Wollongong, NSW, Australia.
    2. Abbas Valadkhani & Mohammad Alauddin, 2003. "Demand for M2 in Developing Countries: An Empirical Panel Investigation," School of Economics and Finance Discussion Papers and Working Papers Series 149, School of Economics and Finance, Queensland University of Technology.
    3. Alberto Giovannini & Bart Turtelboom, 1992. "Currency Substitution," NBER Working Papers 4232, National Bureau of Economic Research, Inc.


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