Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/66299 
Year of Publication: 
1997
Series/Report no.: 
SFB 373 Discussion Paper No. 1997,23
Publisher: 
Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes, Berlin
Abstract: 
Recently, the Bundesbank claimed that monetary targeting has become considerably more diffcult by the increased volatility of short-term money growth. The present paper investigates the impact of German money growth volatility on income velocity and money demand in view of Friedman's money growth volatility hypothesis. Granger-causality tests provide some evidence for a velocity-volatility linkage. However the estimation of volatility-augmented money demand functions reveals that - in contrast to Friedman's hypothesis - increased money growth volatility lowered the demand for money.
Subjects: 
ARCH models
Money growth volatility
demand for money
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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