Survey of Literature on Demand for Money: Theoretical and Empirical Work with Special Reference to Error-Correction Models

Subramanian Sriram

No 1999/064, IMF Working Papers from International Monetary Fund

Abstract: A stable money demand forms the cornerstone in formulating and conducting monetary policy. Consequently, numerous theoretical and empirical studies have been conducted in both industrial and developing countries to evaluate the determinants and the stability of the money demand function. This paper briefly reviews the theoretical work, tracing the contributions of several researchers beginning from the classical economists, and explains relevant empirical issues in modeling and estimating money demand functions. Notably, it summarizes the salient features of a number of recent studies that applied cointegration/error-correction models in the 1990s, and it features a bibliography to aid in research on demand for money.

Keywords: WP; consumer demand; rate of interest; money stock; medium of exchange; amount of money; opportunity cost; precautionary demand; quantity theory; money demand; literature survey; cointegration; error-correction models; money demand function; narrow money; rate of inflation; velocity of circulation; Demand for money; Monetary base; Personal income; Monetary aggregates; Currencies; Western Europe (search for similar items in EconPapers)
Pages: 77
Date: 1999-05-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (68)

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