Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/24838
Authors: 
Carstensen, Kai
Hagen, Jan
Hossfeld, Oliver
Salazar Neaves, Abelardo
Year of Publication: 
2008
Series/Report no.: 
Kiel Working Paper 1443
Abstract: 
In this paper we analyze the money demand functions of the four largest EMU countries and of the four-country (EMU-4) aggregate. We identify reasonable and stable money demand relationships for Germany, France and Spain as well as the EMU-4 aggregate. For the case of Italy, results are less clear. From the estimated money demand functions, we derive both EMU-4 and country-specific measures of money overhang. We find that the EMU-4 overhang measure strongly correlates with the countryspecific measures, particularly since the start of EMU, and is useful to predict country-specific inflation. However, it generally does not encompass country-specific money overhang measures as predictors of inflation. Hence, aggregate money overhang is an important, but by far not an exhaustive, indicator fort he disaggregate level.
Subjects: 
Money demand
stability
money overhang
inflation forecast
JEL: 
E41
E52
Document Type: 
Working Paper

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