On Stability of the Demand for Money in a Developing OECD
Ferda Halicioglu and
Mehmet Ugur ()
Macroeconomics from University Library of Munich, Germany
This paper empirically analyses the stability of the narrow money demand function (M1) in Turkey for the period 1950-2002. As part of the IMF-sponsored stabilisation programme, Turkey has been pursuing base money targets. To ascertain whether this policy framework satisfies the necessary condition for effectiveness, we estimate and test for the stability of Turkish M1 by employing a recent single cointegration procedure proposed by Pesaran et al. (2001) along with the CUSUM and CUSUMSQ stability tests. We demonstrate that there is a stable money demand function and it could be used as an intermediate target of monetary policy in Turkey.
Keywords: co-integration; money demand; stability; Turkey (search for similar items in EconPapers)
JEL-codes: E41 E52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpma:0508001
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