Pendekatan Stok Penyangga Permintaan Uang: Tinjauan Teoritik dan Sebuah Studi Empirik di Indonesia

The demand for money has always played a central issue in monetary theory. Since the earliest classical economist, the long debate in monetary economics has concentrated around the question of “what is the most appropriate model of the money demand”. For the last two decades, the discussion of demand for money function has been focused on the buffer stock approach. It is argued that the quantity of money demanded represents the average or target value of an inventory or a buffer stock. People are willing to hold money as the inventory or the buffer stock because it acts as a medium of exchange and can absorb shocks and gaps in the economy which may occur between the effect of the shock and their subsequent response. The empirical results using the error correction model with shock variable (I-ECM) show that the unanticipated changes in narrow money (M1) lead to temporary changes in the demand for currency. This findings may lead us to suggest that the buffer stock notion underlying the demand for currency in Indonesia.