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Money Demand in the Netherlands
Author:
Mr. Bob Traa
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Series:
IMF Working Papers
Volume/Issue:
Volume 1991: Issue 057
Language:
English
Publication Date:
01 Jun 1991
DOI:
https://doi.org/10.5089/9781451967166.001
ISBN:
9781451967166
ISSN:
1018-5941
Pages:
47
Keywords:
WP; money demand; liquidity ratio; deutsche mark; money stock; equation reduction process; money balance; narrow money stock; exchange rate effect; interest cum exchange rate adjustment; money demand function; explanatory variable; money demand indicator; test statistics; dollar money balance; Demand for money; Exchange rates; Short term interest rates; Yield curve; Liquidity management; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper analyzes the demand for narrow money balances in the Netherlands. Demand for narrow money balances had increased markedly in relation to GNP in the Netherlands throughout the 1980s. This phenomenon could not be explained satisfactorily with traditional Goldfeld-type money demand functions which had performed well until that time. Drawing on advances in dynamic modeling from the error corrections and cointegration literature, and incorporating yield-curve effects and the exchange rate of the guilder with the U.S. dollar as additional monetary indicators significantly improves the performance of money demand estimates.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund