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2010-04-15Buch DOI: 10.18452/4251
The (In)stability of Money Demand in the Euro Area
Lessons from a Cross-Country Analysis
Nautz, Dieter
Rondorf, Ulrike
The instability of standard money demand functions has undermined the role of monetary aggregates for monetary policy analysis in the euro area. This paper uses country-specific monetary aggregates to shed more light on the economics behind the instability of euro area money demand. Our results obtained from panel estimation indicate that the observed instability of standard money demand functions could be explained by omitted variables like e.g. technological progress that are important for money demand but constant across member countries.
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10.18452/4251
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