IMF Staff Papers, Volume 47, No. 3

IMF Staff Papers, October 10, 2001

Source details

Publication date: October 10, 2001
Core focus: Provides an overview of recent theoretical and empirical research on herd behavior in financial markets and surveys a selected number of studies that evaluated the demand for money using the error-correction model approach in the 1990s across a range of industrial and developing countries.
Scope of analysis:
- What precisely is meant by herding.
- Causes of herd behavior.
- Success of existing studies in identifying herding.
- Effect of herding on financial markets.
- Survey of demand-for-money studies applying the error-correction model in the 1990s.

Conceptual clarification:
- Examines precise definitions of herding used in theoretical and empirical work.
Causes and mechanisms:
- Reviews various causes attributed to herd behavior in the literature.
Empirical identification:
- Assesses the success of existing studies in identifying instances of herding.
Market impact:
- Surveys evidence on the effects that herding has on financial market outcomes.

Methodological focus:
- Surveys a selected number of studies from the 1990s that evaluated demand for money using the error-correction model approach.
Coverage:
- Studies span a range of industrial and developing countries.

Subject: Demand for money, Domestic credit, Exchange rate arrangements, Exchange rates, Financial institutions, Foreign exchange, Inflation, Money, Prices, Stocks
Keywords: Asia and Pacific, country estimate, credit growth, Domestic credit, Exchange rate arrangements, Exchange rates, Global, indexed debt, Inflation, inflation rate, issuance policy, pegged-rate regime, price level, reserve country, SP, Stocks