Tests of the functional form, the substitution effect, and the wealth effect of Mexico´s money demand function

Yu Hsing

Revista de Economía del Rosario, 2007, No 4255

Abstract: M1, M2, and M3 demands in Mexico are positively influenced by output and stock prices and negatively associated with the saving rate, the U.S. interest rate, and the expected inflation rate. Peso depreciation affects M1 demand negatively and M2 and M3 demands positively. The log-linear form cannot be rejected for M1 demand and can be rejected for M2 and M3 demands, while the linear form can be rejected for M1, M2, and M3 demands. The CUSUMSQ test shows that M1, M2, and M3 demands are stable; while the CUSUM test indicates stability in M1 and M3 demands and instability in M2 demand.

Keywords: Box-Cox transformation; currency substitution; wealth effect; stability tests (search for similar items in EconPapers)
JEL-codes: E41 F41 O54 (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://revistas.urosario.edu.co/index.php/economia/article/view/1114/1008

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: https://EconPapers.repec.org/RePEc:col:000151:004255

Access Statistics for this article

More articles in Revista de Economía del Rosario from Universidad del Rosario Contact information at EDIRC.
Bibliographic data for series maintained by Facultad de Economía ().