Cookies?
Library Header Image
LSE Research Online LSE Library Services

On the sources of Euro area money demand stability: a time-varying cointegration analysis

Barigozzi, Matteo and Conti, Antonio M. (2010) On the sources of Euro area money demand stability: a time-varying cointegration analysis. ECARES working paper, 2010‐022. Université Libre de Bruxelles, Brussels, Belgium.

Full text not available from this repository.

Identification Number: 2010‐022

Abstract

We adopt a time-varying cointegration test to discriminate among different empirical studies claiming to find a stable Euro Area money demand equation. A time-invariant relation explaining real balances is rejected by data, even when accounting for housing, financial and labour markets. Conversely, an international portfolio allocation approach provides stabilization. In particular, international financial markets, rather than monetary policy, are the key determinant of the observed diverging path of money growth. In terms of policy, we provide empirical support for a New Two Pillars Strategy aimed to achieve financial stability through money and credit and price stability through interest rates.

Item Type: Monograph (Working Paper)
Official URL: http://www.ecares.org
Additional Information: © 2010 Université Libre de Bruxelles
Subjects: H Social Sciences > HA Statistics
H Social Sciences > HB Economic Theory
Sets: Departments > Statistics
Collections > Economists Online
Date Deposited: 07 Jan 2011 09:52
Last Modified: 18 May 2011 09:52
URI: http://eprints.lse.ac.uk/id/eprint/31196

Actions (login required)

View Item View Item