Money demand and economic uncertainty in Barbados
MPRA Paper from University Library of Munich, Germany
Using the unrestricted error correction model proposed by Pesaran et al (2001), this paper investigates the relationship between economic uncertainty and money demand in Barbados. Results suggest that in the short run, agents tend to increase money holdings in the face of heightened uncertainty. However, this impact does not carry on into the longer term. Rather, the results suggest that nominal assets may become less attractive during prolonged periods of economic uncertainty.
Keywords: Money demand; economic uncertainty; Barbados; fixed exchange rate (search for similar items in EconPapers)
JEL-codes: C32 E41 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:34561
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