Demand for Money: Empirical Studies

Abstract

The relation between the demand for money balances and its determinants is a fundamental building block in most theories of macroeconomic behaviour and is a critical component in the formulation of monetary policy. Indeed, a stable demand function for money has long been perceived as a prerequisite for the use of monetary aggregates in the conduct of policy. Not surprisingly, then, the demand for money has been subjected to extensive empirical scrutiny.