The Australian Demand Function for Money: Another Look at Stability
Opinion on the stability or otherwise of the demand for money in Australia can be characterised as divided. In this paper, several conventional single-equation models representing the demand for money are re-estimated with extended and revised data sets, and subjected to a range of stability tests. Some attention is paid to the possibility of heteroskedasticity in the residuals, which is important in the context of stability tests. Apart from testing for stability in a general sense, particular emphasis is given to the first half of the 1980’s, where wide-ranging financing deregulation might be expected to affect relationships between the money stock, income and interest rates. The conclusion is that it is difficult to accept the proposition that the conventional equations have not been subject to instability. This is particularly so for M3; the evidence is more mixed in the case of M1.
|Date of creation:||Jan 1987|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.rba.gov.au/Email:
More information through EDIRC
|Order Information:||Web: http://www.rba.gov.au/forms/rdp-order-form/|
When requesting a correction, please mention this item's handle: RePEc:rba:rbardp:rdp8701. 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: (Paula Drew)
If references are entirely missing, you can add them using this form.