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Dynamic modelling of the demand for money in Latvia

Boriss Siliverstovs

Baltic Journal of Economics, 2008, vol. 8, issue 1, 53-74

Abstract: This study develops a money demand model for Latvia for the period from 1996 to 2006. The model isspecified in the error-correction form based on a single co-integrating vector between real money balances, gross domestic product, long-term interest rate, and the rate of inflation. The model meets all three requirements for ‘stability’ put forward in Judd and Scadding (1982). The model is both well-specified and highly parsimonious. It demonstrates high explanatory power in sample as well as accurately forecasting real money balances out of sample.

Keywords: M2 money demand; stability; new EU Member States; Latvia (search for similar items in EconPapers)
JEL-codes: C32 E41 (search for similar items in EconPapers)
Date: 2008
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Working Paper: Dynamic Modelling of the Demand for Money in Latvia (2007) Downloads
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