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Money Demand in an Open Transition Economy

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  • LUBO KOMREK
  • MARTIN MELECK

Abstract

This article offers an internationalized view of the demand for money as applied to the Czech Republic. The traditional money demand function, consisting purely of domestic variables, is extended to include certain foreign determinants that likely affect the demand for money in a small open transition economy. In this respect, both narrow and broad money are considered. Several estimation techniques, DOLS, DGLS, the Johansen method, and ARDL, are applied to increase robustness of the results acquired. The stability of the estimates obtained is tested to study changes in the estimated relations during the transition period. Finally, estimates of the possible effects of money market disequilibria on prices and output are presented. The results suggest that international variables are significant mainly in the context of broad money demand and that liquidity gaps significantly influence prices and output dynamics.

Suggested Citation

  • Lubo Komrek & Martin Meleck, 2004. "Money Demand in an Open Transition Economy," Eastern European Economics, Taylor & Francis Journals, vol. 42(5), pages 73-73, September.
    • Handle: RePEc:mes:eaeuec:v:42:y:2004:i:5:p:73-73
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    References listed on IDEAS

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    2. Tomáš Havránek & Jana Sedlaříková, 2014. "Meta-analýza důchodové elasticity poptávky po penězích [A Meta-Analysis of the Income Elasticity of Money Demand]," Politická ekonomie, Prague University of Economics and Business, vol. 2014(3), pages 366-382.
    3. Claudiu Albulescu & Dominique P'epin, 2016. "The loss of interest for the euro in Romania," Papers 1609.01900, arXiv.org.
    4. Jana Juriová, 2016. "Money Market Equilibrium in the Czech Republic," Prague Economic Papers, Prague University of Economics and Business, vol. 2016(3), pages 321-334.
    5. C. T. Albulescu & D. Pépin, 2019. "The money demand and the loss of interest for the euro in Romania," Applied Economics Letters, Taylor & Francis Journals, vol. 26(3), pages 196-201, February.
    6. Claudiu Albulescu & Dominique Pépin, 2016. "The loss of interest for the euro in Romania," Working Papers hal-01361214, HAL.

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