A COMPONENT-BASED ANALYSIS OF THE DANISH LONG-RUN MONEY DEMAND RELATION

Lisbeth la Cour ()

No 06-1999, Working Papers from Copenhagen Business School, Department of Economics

Abstract: This paper examines the relation between monetary asset components and some of the

variables that traditionally enter into aggregate money demand relations. This is done for

Danish data within the natural framework of a multivariate econometric model. The

purpose of the study is to investigate issues in relation to the level and weighting of a

monetary aggregate. We show that within this model it is possible to identify monetary

aggregates at different levels of aggregation and that for the narrow aggregate (M1) equal

weighting of the components are permitted. For the broader aggregates, (M2) or (M2-M1),

equal weighting is no longer appropriate. These findings are not contradictory to what we

would expect from aggregation and index number theory. Finally, the overall identifica-tion

of the stationary (or long-run) structure points towards a co-existence of a liquid and

a less liquid money demand relation which is interpreted as an indication of the

possibility of splitting the total money demand relation with respect to different motives

for holding money.

Keywords: Monetary asset components; Aggregate money demand; Denmark; Demand relation (search for similar items in EconPapers)
JEL-codes: E41 (search for similar items in EconPapers)
Pages: 24 pages
Date: 1999-07-18
New Economics Papers: this item is included in nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://openarchive.cbs.dk/cbsweb/handle/10398/7513 (application/pdf)
Full text not avaiable

Related works:
Working Paper: A Component® based Analysis of the danish Long-run Money Demand Relation (1995)
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:hhs:cbsnow:1999_006

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Papers from Copenhagen Business School, Department of Economics Copenhagen Business School, Department of Economics, Porcelaenshaven 16 A. 1.floor, DK-2000 Frederiksberg, Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by CBS Library Research Registration Team ().