EMPIRICAL EVIDENCE FOR A MONEY DEMAND FUNCTION: A PANEL DATA ANALYSIS OF 27 COUNTRIES IN 1988-98

Alfredo Garcia-Hiernaux and Leonel Cerno

Applied Econometrics and International Development, 2006, vol. 6, issue 1

Abstract: The purpose of this paper is to estimate the money demand function of Cagan (1956) using a panel data set covering 27 countries with different economic levels over the period 1988-98. The static fixed effects and the dynamic fixed effects reveal that a money demand equation exists. However, in contrast to the theory proposed by Cagan, estimates of the output elasticity of money demand are in the range from 0.18 to 0.20.

Keywords: Money demand; Inflation; Panel data; Dynamic fixed effects (search for similar items in EconPapers)
JEL-codes: C23 C52 E41 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (5)

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