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Title:Heterogeneity in money holdings across euro area countries: The role of housing PDF Logo
Authors:Setzer, Ralph
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.
Subjects:Money
housing
national contribution
euro area
JEL:E41
E51
E52
ISBN:978-3-86558-601-8
Document Type:Working Paper
Appears in Collections:Discussion Paper Series 1: Economic Studies, Deutsche Bundesbank

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