The paper assesses the stability and predictive performance of a European money demand function as compared to national money demand functions. Two different groups of countries for a monetary union are considered. With respect to the explanatory accuracy, the national functions perform better...

Proponents of an aggregation theoretic approach to money demand argue that simple-sum measures do not capture the theoretical notion of money. This is especially true for broad monetary aggregates, which include components held for savings motives that are only imperfect substitutes for...

This paper discusses alternative explanations of trends in the velocity of different money aggregates put forward in the literature. We make a fresh approach towards explaining changes in velocity trends by introducing a hypothesis on the distribution of money holdings. This leads to a number of...

One prominent characteristic of independent central bank is the legal limitation of the central bank's lending to the government. Although a priori we expect a strong link between the legal restriction on central bank credit to the government and seigniorage, the empirical cross-country evidence...

The paper investigates the existence of a stable money demand function for four major european countries. Estimation of individual and aggregate money demand functions is performed using the cointegration framework developed by Engle and Granger (1987). The results for aggregate and individual...

We estimate monetary policy reaction functions for France, Germany, Italy, the United Kingdom, and the United States using a Markov-switching model that incorporates switching in the monetary policy regime as well as an independent switching process for shifts in the state of the economy....

Keynesian theory suggests that a reduction in government expenditure has a negative effect on private demand and therefore on output. Contrary, neoclassical theory argues that reduced public expenditure makes room for an expansion of the private sector and thus has a stimulating effect on the...

Though most economists agree that monetary policy has significant effects on the real sector in the short run, interest-rate elasticities of macroeconomic aggregates in general are found to be low. Recently, the credit channel has been discussed as an additional channel through which monetary...

Though most economists agree that monetary policy has significant effects on the real sector in the short run, interest-rate elasticities of macroeconomic aggregates in general are found to be low. Recently, the credit channel has been discussed as an additional channel through which monetary...