Issues in Money Demand: The Case of Europe

Michael John Artis () and Andreas Beyer ()

Journal of Common Market Studies, 2004, vol. 42, issue 4, pages 717-736

Abstract: This article establishes a co-integration analysis for the euro area (sample period: 1983-2000), identifying three co-integrating vectors: one which can be labelled money demand (in which real M3 money balances are related to output, with unit elasticity, and the long rate of interest); another pertaining to the spread between the short and long rate of interest; and a third which is an output (IS) relationship in which output is related to the real rate of interest. Currency substitution terms affect the adjustment of real money balances though they do not enter the co-integration space. We use the aggregation procedure for historical Euroland data advocated by Beyer, Doornik and Hendry for application to aggregation of money, GDP and prices when exchange rates were varying. We make use of the German short- and long-term interest rates as benchmarks for own rate and opportunity cost variables. Copyright Blackwell Publishing Ltd 2004.

Date: 2004
View citations in EconPapers

Downloads: (external link)
http://www.blackwell-synergy.com/doi/abs/10.1111/j.0021-9886.2004.00526.x link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:bla:jcmkts:v:42:y:2004:i:4:p:717-736

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0021-9886

Access Statistics for this article

Journal of Common Market Studies is edited by Jim Rollo and Daniel Wincott

More articles in Journal of Common Market Studies from Blackwell Publishing
Series data maintained by Christopher F. Baum ().