Money Demand in the Netherlands
June 1, 1991
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Summary
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.
Subject: Asset and liability management, Demand for money, Exchange rates, Financial services, Foreign exchange, Liquidity indicators, Liquidity management, Money, Short term interest rates, Yield curve
Keywords: Demand for money, deutsche mark, dollar money balance, equation reduction process, exchange rate effect, Exchange rates, explanatory variable, Global, interest cum exchange rate adjustment, Liquidity management, liquidity ratio, money balance, money demand, money demand function, money demand indicator, money stock, narrow money stock, Short term interest rates, test statistics, WP, Yield curve
Pages:
47
Volume:
1991
DOI:
Issue:
057
Series:
Working Paper No. 1991/057
Stock No:
WPIEA0571991
ISBN:
9781451967166
ISSN:
1018-5941
