Has M2 demand become unstable?

Standard M2 demand regressions generate prediction errors in 1990, 1991, and 1992 that cumulate to an overprediction of M2 of about 4.2 to 4.3 percent by the second quarter of 1992. These prediction errors are not large and can be accounted for by M2 demand regressions that include a yield curve variable. The yield curve variable captures portfolio substitutions out of M2 into other long-term financial assets such as bond and equity funds.

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Year of publication:	1992
Authors:	Mehra, Yash P.
Published in:	Economic Review. - Federal Reserve Bank of Richmond. - 1992, Sep, v. 78, no. 5, p. 26-35
Publisher:	Federal Reserve Bank of Richmond
Subject:	Money supply

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Extent:	application/pdf
Type of publication:	Article
Language:	English
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005063835