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In search of a stable, short-run M1 demand function

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  • Yash P. Mehra

Abstract

Conventional M1 demand functions reformulated using error-correction and cointegration techniques neither depict parameter stability nor satisfactorily explain short-run changes in M1. Thus, M1 remains unreliable as an indicator variable for monetary policy.

Suggested Citation

  • Yash P. Mehra, 1992. "In search of a stable, short-run M1 demand function," Economic Review, Federal Reserve Bank of Richmond, vol. 78(May), pages 9-23.
    • Handle: RePEc:fip:fedrer:y:1992:i:may:p:9-23:n:v.78no.6
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    References listed on IDEAS

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    2. Hoffman, Dennis L & Rasche, Robert H, 1991. "Long-Run Income and Interest Elasticities of Money Demand in the United States," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 665-674, November.
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    5. Hafer, R W & Jansen, Dennis W, 1991. "The Demand for Money in the United States: Evidence from Cointegration Tests," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 23(2), pages 155-168, May.
    6. Engle, Robert F. & Yoo, Byung Sam, 1987. "Forecasting and testing in co-integrated systems," Journal of Econometrics, Elsevier, vol. 35(1), pages 143-159, May.
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    8. Baum, Christopher F & Furno, Marilena, 1990. "Analyzing the Stability of Demand-for-Money Equations via Bounded-Influence Estimation Techniques," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 22(4), pages 465-477, November.
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    Cited by:

    1. Scott Hendry, 1995. "Long-Run Demand for M1," Macroeconomics 9511001, University Library of Munich, Germany.
    2. Lim, Lee Kian, 1995. "Cointegration and an error correction model of money demand for Australia," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 39(3), pages 293-297.

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