Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/208417 
Year of Publication: 
1999
Series/Report no.: 
Working paper No. 6-99
Publisher: 
Copenhagen Business School (CBS), Department of Economics, Frederiksberg
Abstract: 
This paper examines the relation between monetary asset components and some of the variables that traditionally enter into aggregate money demand relations. This is done for Danish data within the natural framework of a multivariate econometric model. The purpose of the study is to investigate issues in relation to the level and weighting of a monetary aggregate. We show that within this model it is possible to identify monetary aggregates at different levels of aggregation and that for the narrow aggregate (M1) equal weighting of the components are permitted. For the broader aggregates, (M2) or (M2-M1), equal weighting is no longer appropriate. These findings are not contradictory to what we would expect from aggregation and index number theory. Finally, the overall identifica-tion of the stationary (or long-run) structure points towards a co-existence of a liquid and a less liquid money demand relation which is interpreted as an indication of the possibility of splitting the total money demand relation with respect to different motives for holding money.
Subjects: 
Monetary asset components
Aggregate money demand
Denmark
Demand relation
JEL: 
E41
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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