The Long-Run Demand for M2 Reconsidered

Sophie Altermatt

Diskussionsschriften from Universitaet Bern, Departement Volkswirtschaft

Abstract: This paper reconsiders the long-run demand for M2 based on a newly con- structed dataset featuring 32 countries since the first half of the 19th century. The evidence from cointegration tests suggests that a long-run equilibrium re- lationship for M2 demand is hardly present. Specifically, only for five countries (Finland, Korea, Mexico, Paraguay and Taiwan) cointegration tests produce strong evidence in favor of a stable long-run money demand. Evidence for Israel and Lebanon is weaker, but still points towards a stable long-run demand for M2. For all other countries evidence speaks against a stable money demand or it is mixed across money demand specifications and/or type of cointegration test.

Keywords: Money Demand; Velocity; Cointegration (search for similar items in EconPapers)
JEL-codes: E4 E41 (search for similar items in EconPapers)
Date: 2018-03
New Economics Papers: this item is included in nep-his, nep-mac, nep-mon and nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:ube:dpvwib:dp1824

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