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Monetary policy implementation and money demand instability during the financial crisis

Author

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  • Svatopluk Kapounek

    (Ústav financí, Mendelova univerzita v Brně, Zemědělská 1, 613 00 Brno, Česká republika)

Abstract

The author focuses on the money endogeneity in the context of common monetary policy implementation in the euro area. The empirical analysis shows money demand function instability during the financial crisis. The instability is described by decrease in credit money creation and money velocity changes. The cointegration tests identifed long-run positive relationship between monetary aggregates and economic activity. Concurrently, the economic activity is treated to be weakly exogenous in the model.The conclusions are discussed with Postkeynesians' assumption, that central banks cannot fix the stock of money in a country. The causality is directed from economic activity to money demand.

Suggested Citation

  • Svatopluk Kapounek, 2011. "Monetary policy implementation and money demand instability during the financial crisis," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 59(7), pages 177-186.
    • Handle: RePEc:mup:actaun:actaun_2011059070177
    DOI: 10.11118/actaun201159070177
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    References listed on IDEAS

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    1. Manfred J. M. Neumann, 1997. "Monetary Targeting in Germany," Palgrave Macmillan Books, in: Iwao Kuroda (ed.), Towards More Effective Monetary Policy, chapter 7, pages 176-210, Palgrave Macmillan.
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    9. Hansen, Bruce E., 1992. "Testing for parameter instability in linear models," Journal of Policy Modeling, Elsevier, vol. 14(4), pages 517-533, August.
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    Cited by:

    1. Veronika Kajurová & Petr Rozmahel, 2016. "Stock Market Development and Economic Growth: Evidence from the European Union," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 64(6), pages 1927-1936.
    2. Lucie Režňáková & Svatopluk Kapounek, 2015. "Is There a Credit Crunch in the Czech Republic?," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 63(3), pages 995-1003.
    3. SVILOKOS, Tonći, 2016. "Does Economic Crisis Affect The Demand For Money: Evidence From Croatia?," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 20(3), pages 6-27.

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