<abstract xmlns="http://www.w3.org/1999/xhtml"><p>The goal of this paper is to examine the stability of money demand (M1) in five Western Balkan countries using quarterly data from 2005Q1 to 2014Q4. The dynamic ordinary least squares – DOLS method was used to find the long-run relationships in a money demand model. The empirical results identify the long-run money demand relationship among real M1 nominal interest rate, exchange rate, inflation and a dummy variable for the effect of the European debt crisis. The estimated long-run coefficients are, respectively −0.086, 0.519, 0.002 and 0.030. Our findings imply that real money demand in Western Balkan countries was stable in the analyzed period.</p></abstract>

The goal of this paper is to examine the stability of money demand (M1) in five Western Balkan countries using quarterly data from 2005Q1 to 2014Q4. The dynamic ordinary least squares – DOLS method was used to find the long-run relationships in a money demand model. The empirical results identify the long-run money demand relationship among real M1 nominal interest rate, exchange rate, inflation and a dummy variable for the effect of the European debt crisis. The estimated long-run coefficients are, respectively −0.086, 0.519, 0.002 and 0.030. Our findings imply that real money demand in Western Balkan countries was stable in the analyzed period.

The Stability of Long-Run Money Demand in Western Balkan Countries: An Empirical Panel Investigation

Faculty of Economics, Ss Cyril and Methodius, University in Skopje

South East European Journal of Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

The goal of this paper is to examine the stability of money demand (M1) in five Western Balkan countries using quarterly data from 2005Q1 to 2014Q4. The...

The Stability of Long-Run Money Demand in Western Balkan Countries: An Empirical Panel Investigation

Published Online: Dec 30, 2016

Page range: 61 - 70

DOI: https://doi.org/10.1515/jeb-2016-0011

Keywords
money demand, cointegration, dynamic ordinary least squares, stability, Western Balkan countries

© 2016 South East European Journal of Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

The Stability of Long-Run Money Demand in Western Balkan Countries: An Empirical Panel Investigation

Published Online: Dec 30, 2016

Page range: 61 - 70

DOI: https://doi.org/10.1515/jeb-2016-0011

Keywordsmoney demand, cointegration, dynamic ordinary least squares, stability, Western Balkan countries

© 2016 South East European Journal of Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
money demand, cointegration, dynamic ordinary least squares, stability, Western Balkan countries