Determinants of the Demand for Money in CEE Countries: Updated Evidence

Valentina-Ioana Mera and Monica Ioana Pop Silaghi

Eastern European Economics, 2018, vol. 56, issue 5, 334-357

Abstract: This article empirically models the relationship between the demand for money and a set of determinants, using the autoregressive distributed lag (ARDL) bounds-testing approach proposed by Pesaran, Shin, and Smith. We test this relationship in a country-specific framework of six Central and East European countries (Bulgaria, Croatia, Czech Republic, Hungary, Poland, and Romania) over the past twenty years. The results confirm the existence of a long-term cointegration relationship between the demand for money and its determinants, except in Bulgaria and Croatia. We identified a significant currency substitution effect in Bulgaria, Croatia, and Hungary, whereas in the Czech Republic, the wealth effect is stronger.

Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:mes:eaeuec:v:56:y:2018:i:5:p:334-357

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DOI: 10.1080/00128775.2018.1496458

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