Survey of Literature on Demand for Money: Theoretical and Empirical Work with Special Reference to Error-Correction Models
May 1, 1999
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Summary
A stable money demand forms the cornerstone in formulating and conducting monetary policy. Consequently, numerous theoretical and empirical studies have been conducted in both industrial and developing countries to evaluate the determinants and the stability of the money demand function. This paper briefly reviews the theoretical work, tracing the contributions of several researchers beginning from the classical economists, and explains relevant empirical issues in modeling and estimating money demand functions. Notably, it summarizes the salient features of a number of recent studies that applied cointegration/error-correction models in the 1990s, and it features a bibliography to aid in research on demand for money.
Subject: Currencies, Demand for money, Monetary aggregates, Monetary base, Money, National accounts, Personal income
Keywords: amount of money, cointegration, consumer demand, Currencies, Demand for money, error-correction models, literature survey, medium of exchange, Monetary aggregates, Monetary base, money demand, money demand function, money stock, narrow money, opportunity cost, Personal income, precautionary demand, quantity theory, rate of inflation, rate of interest, velocity of circulation, Western Europe, WP
Pages:
77
Volume:
1999
DOI:
Issue:
064
Series:
Working Paper No. 1999/064
Stock No:
WPIEA0641999
ISBN:
9781451848540
ISSN:
1018-5941
