The demand for money in Austria

Bernd Hayo

No B 06-2000, ZEI Working Papers from University of Bonn, ZEI - Center for European Integration Studies

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 a long-term interest rate. The statistical properties of the estimated short-run money demand equations – considering insample and out-of-sample (35 observations) tests – are generally very good.

Keywords: monetary economics; money demand; Austria (search for similar items in EconPapers)
JEL-codes: C32 E41 (search for similar items in EconPapers)
Date: 2000
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Journal Article: The demand for money in Austria (2000)
Working Paper: The Demand For Money In Austria (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zeiwps:b062000

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