Australasian money demand stability: application of structural break tests

Australasian money demand stability: Application of structural break tests

Estimates of the demand for money provide important foundations for monetary policy setting but if the estimation technique does not explicitly account for structural changes then such estimates will be biased. This paper presents an investigation into the level and stability of money demand (M1) for Australia and New Zealand over the 1960-2009 period and demonstrates that both countries experi...

Structural Break, Stability and Demand for Money in India1

This paper attempts to take a meticulous look on stability of money demand in India Using annual data for period 1953-2007 and the Hansen (1992) and Gregory Hansen (1996) co-integration approaches with structural break. Results of the Gregory Hansen (1996) cointegration analysis show the presence of cointegration in demand for money, real GDP and nominal interest rate with structural break at 1...

Money Demand and Macroeconomic Stability Revisited1

This paper reexamines the role of money demand for the local dynamics of a sticky price model where money enters the utility function and monetary policy is either conducted according to a Taylor-type interest rate rule or to a Friedman-type constant money growth rule. It is shown that activeness, which is commonly recommended as a device for a stabilizing interest rate policy, leads to stable ...

The Stability of Demand for Money and its Dynamic Aspects in Iran

A Longitudinal Analysis of the Stability of Household Money Demand

Past aggregate time-series studies, conducted under the assumption of a representative economic agent, frequently show that the demand for narrowly defined M1, especially non-interest-yielding demand deposit, is unstable during periods of financial innovations. Whether this is longitudinally the case among life-cycle savers is unclear. This study utilizes longitudinal data to take another look ...