Broad Money Demand and Financial Liberalization in Greece

Author/Editor:

Sunil Sharma ; Neil R. Ericsson

Publication Date:

July 1, 1996

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper develops a constant, data-coherent, error correction model for broad money demand (M3) in Greece. The model contributes to a better understanding of the effects of monetary policy in Greece, and of the portfolio consequences of financial innovation in general. The broad monetary aggregate M3 was targeted until recently, and current Greek monetary policy still uses such aggregates as guidelines, yet analysis of this aggregate has been dormant for over a decade. Inspite of large fluctuations in the inflation rate, introduction of new financial instruments, and liberalization of the financial system, the estimated model is remarkably stable. The dynamics of money demand are important, with price and income elasticities being much smaller in the short run than in the long run.

Series:

Working Paper No. 1996/062

Subject:

Demand for money Deposit rates Financial institutions Financial services Inflation Monetary base Money Prices Treasury bills and bonds

English

Publication Date:

July 1, 1996

ISBN/ISSN:

9781451848243/1018-5941

Stock No:

WPIEA0621996

Pages:

55

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