The Demand For Money In Austria

Bernd Hayo

Macroeconomics from University Library of Munich, Germany

Abstract: In this paper, the demand for real money M1, M2 and M3 is estimated for Austria. The modelling takes place within the framework of a small vector autoregression. To estimate the demand for money, two-equation error-correction models are constructed, which contain the short-run dynamics and the long-run economic equilibrium. It is found that a stable money demand exists for all monetary aggregates. The long-run equilibrium of M1, after accounting for a structural break in 1979, can be characterised as a classical type of money demand, with no interest rate effects and a unity elasticity of real GDP. In the case of M2 and M3, we find a unit coefficient on income and a significantly negative influence of an interest rate. The statistical properties of the estimated short-run money demand equations - considering in-sample and out-of-sample (35 observations) tests - are generally very good.

Keywords: money; demand; monetary; economics; Austria; monetary; policy (search for similar items in EconPapers)
JEL-codes: C32 E41 (search for similar items in EconPapers)
Date: 1999-02-25
Note: Type of Document - ; prepared on IBM PC; to print on PDF;
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: The demand for money in Austria (2000)
Working Paper: The demand for money in Austria (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpma:9902012

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