The Stability of Long-Run Money Demand in Western Balkan Countries: An Empirical Panel Investigation

Kjosevski Jordan (), Petkovski Mihail () and Naumovska Elena ()
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Kjosevski Jordan: Independent Researcher
Petkovski Mihail: Faculty of Economics, Ss Cyril and Methodius, University in Skopje
Naumovska Elena: Faculty of Economics, Ss Cyril and Methodius, University in Skopje

South East European Journal of Economics and Business, 2016, vol. 11, issue 2, 61-70

Abstract: The goal of this paper is to examine the stability of money demand (M1) in five Western Balkan countries using quarterly data from 2005Q1 to 2014Q4. The dynamic ordinary least squares – DOLS method was used to find the long-run relationships in a money demand model. The empirical results identify the long-run money demand relationship among real M1 nominal interest rate, exchange rate, inflation and a dummy variable for the effect of the European debt crisis. The estimated long-run coefficients are, respectively −0.086, 0.519, 0.002 and 0.030. Our findings imply that real money demand in Western Balkan countries was stable in the analyzed period.

Keywords: money demand; cointegration; dynamic ordinary least squares; stability; Western Balkan countries (search for similar items in EconPapers)
JEL-codes: C32 E41 E52 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:seejeb:v:11:y:2016:i:2:p:61-70:n:5

DOI: 10.1515/jeb-2016-0011

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