An Econometric and Historical Perspective on the Long-Run Stability of the Demand for Money: The Case of Italy

This paper investigates the stability of the demand for money in Italy using a new data set for the period 1861-1990. We discuss how institutional and other historical factors may have shaped monetary history and how, despite major shifts in policy and a turbulent economic background, there seems to be considerable evidence in support of a stable demand for money relationship. We place our results in the wider context of the debate on the institutionalist view of velocity changes, and the debate on the stability of the demand for money in other countries such as the UK and the US.