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Testing the Lucas critique for the Turkish money demand function

  • Yıldırım, Metin
  • Korap, Levent

This paper aims to test the prevalence of the Lucas critique by use of an applied modelling approach. The Turkish narrow money demand is chosen for investigation purposes and an extensive statistical-based econometric application has been carried out to observe whether the model in question has been exposed to the content of such a critique. The results confirm the theory to explain the behavioral foundations of aggregate monetary economics approaches and reveal that no evidence can be found in favor of the non-rejection of the Lucas critique that leads us to infer that the modelling attempt can be considered by the researcher a feedback model which is able to encompass a whole class of expectation models.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 41156.

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Date of creation: 2012
Date of revision:
Publication status: Published in İktisat, İşletme ve Finans 27.318(2012): pp. 57-82
Handle: RePEc:pra:mprapa:41156
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