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|Title:||Heterogeneity in money holdings across euro area countries: The role of housing |
van den Noord, Paul
Wolff, Guntram B.
|Issue Date:||2010 |
|Series/Report no.:||Discussion Paper Series 1: Economic Studies 2010,04|
|Abstract:||In this paper we examine why monetary aggregates of euro area Member States have developed differently since the inception of the euro. We derive a money demand equation that incorporates housing wealth and collateral as well as substitution effects on real money holdings. Empirically, we show that cross-country differences in real balances are determined not only by income differences, a standard determinant of money demand, but also by house price developments. Higher house prices and higher user costs of housing are both associated with larger money holdings. Country-specific money holdings are also connected with structural features of the housing market.|
|Document Type:||Working Paper|
|Appears in Collections:||Discussion Paper Series 1: Economic Studies, Deutsche Bundesbank|
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