A Stable Model for Euro Area Money Demand: Revisiting the Role of Wealth

Andreas Beyer ()

No 1111, Working Paper Series from European Central Bank

Abstract: In this paper we present an empirically stable money demand model for Euro area M3. We show that housing wealth is an important explanatory variable of long-run money demand that captures the trending behaviour of M3 velocity, in particular its shift in the first half of this decade. We show that the current financial crisis has no impact on the stability of our money demand model. JEL Classification: C22, C32, E41

Keywords: cointegration; money demand; parameter constancy; Vector Error Correction Model; wealth (search for similar items in EconPapers)
Date: 2009-11
New Economics Papers: this item is included in nep-cba, nep-eec and nep-mon
Note: 336354
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (57)

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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20091111

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