Modeling the Demand for Currency Issued in Turkey

Ozge Akinci

Central Bank Review, 2003, vol. 3, issue 1, 1-25

Abstract: The purpose of this study is to investigate the empirical relationship between real money balances, real income, and the opportunity cost variables in Turkey using quarterly data between the periods 1987Q1-2003Q3. The estimation results reveal that long run demand for real cash balances depends on real income, interest rate on government securities and the exchange rate. The long run elasticity of income is close to one with the opportunity cost variables carrying the expected signs. Based on the cointegration and the weak exogeneity test results, single equation error correction model is specified and estimated. The estimated models disclose the fact that the income and the interest rate effects is much smaller in the short run than the long run, whereas exchange rate influence is more pronounced in the short run.

Keywords: Money Demand; Cointegration; Error Correction Modelling (search for similar items in EconPapers)
JEL-codes: C32 C51 C52 E41 (search for similar items in EconPapers)
Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN ... iew/2003/Volume+3-1/ (application/pdf)

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:tcb:cebare:v:3:y:2003:i:1:p:1-25

Access Statistics for this article

More articles in Central Bank Review from Research and Monetary Policy Department, Central Bank of the Republic of Turkey Contact information at EDIRC.
Bibliographic data for series maintained by () and () and () and ().