European Integration and the Demand for Broad Money

Carlo Monticelli and Marc-Olivier Strauss-Kahn

The Manchester School of Economic & Social Studies, 1993, vol. 61, issue 4, 345-66

Abstract: Cointegration analysis and error-correction modeling show that a stable and predictable aggregate demand for broad money holds for the group of countries participating in the Exchange Rate Mechanism (ERM) of the European Monetary System. This result seems robust to different econometric techniques, samples, and methods of conversion of national variables into ECU. Furthermore, ERM-wide equations compare favorably with national equations and with the previous estimates of areawide equations for narrow money. These findings suggest that an areawide broad monetary aggregate can play a useful role in the coordination of monetary policy at the European level. Copyright 1993 by Blackwell Publishers Ltd and The Victoria University of Manchester

Date: 1993
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Working Paper: European integration and the demand for broad money (1992)
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