Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/17750
Authors: 
Carstensen, Kai
Year of Publication: 
2004
Series/Report no.: 
Kiel Working Paper 1179
Abstract: 
This paper analyzes the question whether money demand in the Euro area has undergone a structural change in recent time when M3 money growth has considerably overshot the reference value set by the European Central Bank (ECB). It is found that conventional specifications of money demand have in fact become unstable while specifications which are augmented with equity returns and volatility remain stable. Using such an augmented specification, it turns out that the excessive M3 growth rates can largely be attributed to the stock market downswing and do not put a measurable threat to price stability.
Subjects: 
Money demand
EMU
excess liquidity
JEL: 
E41
Document Type: 
Working Paper

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