M3 Money Demand and Excess Liquidity in the Euro Area

Artikel

Recent empirical studies have found evidence of unstable long run money demand functions if recent data are used. If the link between money balances and the macroeconomy is fragile, the rationale of monetary aggregates in the ECB strategy has to be doubted. In contrast we present a ``stable'' long run money demand relationship for M3 for the period 1983-2006. To obtain the result, the short run homogeneity restriction between money and prices is relaxed and a break in the income elasticity of money demand after 2001 is taken into account. Measures of excess liquidity do not show significant inflation pressures.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Public Choice ; ISSN: 1573-7101 ; Volume: 144 ; Year: 2010 ; Issue: 3 ; Pages: 459-472 ; Berlin: Springer

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models; Single Variables: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes ; Model Evaluation, Validation, and Selection ; Demand for Money
• Subject: Cointegration analysis ; error correction ; excess liquidity ; monetary policy ; money demand

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dreger, Christian ; Wolters, Jürgen
• Event: Veröffentlichung
• (who): Springer ; ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft
• (where): Berlin
• (when): 2010

Further information

• DOI: doi:10.1007/s11127-010-9679-5
• Handle: http://hdl.handle.net/10419/144568
• Last update: 10.03.2025, 11:43 AM CET