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Title:A cointegration analysis of a money demand system in Europe PDF Logo
Authors:Gottschalk, Jan
Issue Date:1999
Series/Report no.:Kiel Working Papers 902
Abstract:This paper presents a multivariate analysis of a money demand system in Europe. The system comprises real broad money, real GDP, the inflation rate, a long-term and a short-term interest rate. Two stable cointegration vectors can be identified: a money demand function and a long-run Fisher equation. Inflation does not play a role in the specification of the European money demand function. Stability of money demand is generally seen as a precondition for monetary targeting. No suggestive evidence for structural instability is found for long-run money demand. This is of particular relevance for the monetary strategy of the ECB.
Subjects:Money Demand in Europe
European Monetary Union
JEL:E41
E52
Document Type:Working Paper
Appears in Collections:Kieler Arbeitspapiere, IfW
Publikationen von Forscherinnen und Forschern des IfW

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