The Stability of Money Demand in the Long Run: An Empirical Study from Italy

Chaido Dritsaki ()
Additional contact information
Chaido Dritsaki: University of Western Macedonia

Chapter Chapter 25 in Advances in Cross-Section Data Methods in Applied Economic Research, 2020, pp 401-418 from Springer

Abstract: Abstract The stability of money demand is a crucial issue for the effectiveness of monetary policy in each country and is being threatened when important changes are taking place in its monetary policy. Applying ARDL technique and error correction model (ECM) developed by Pesaran et al. (2001), this paper aims to examine the factors that influence money demand in Italy for the period 1960–2017. The results of ARDL technique and ECM show that there is both a long-run and short-run relationship among variables used. Real income, long-run interest rate, and inflation comply with the expectations of monetary theory. Finally, the results of CUSUM and CUSUMSQ stability tests and unit circle confirm the long-run relationship among variables and also that the stability condition is satisfied when money demand for Italy is estimated with M1 variable for the examined period.

Keywords: Money demand stability; ARDL model; Vector error correction model; Stability of the coefficients; Monetary aggregates; Italy (search for similar items in EconPapers)
JEL-codes: C22 E41 E52 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:spr:prbchp:978-3-030-38253-7_25

Ordering information: This item can be ordered from
http://www.springer.com/9783030382537

DOI: 10.1007/978-3-030-38253-7_25

Access Statistics for this chapter

More chapters in Springer Proceedings in Business and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().