Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/47056
Authors: 
Gottschalk, Jan
Year of Publication: 
1999
Series/Report no.: 
Kiel Working Paper 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

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