Kugler, Peter; Kaufmann, Sylvia - Oesterreichische Nationalbank - 2006
This paper analyzes the recently documented instability of money demand in the euro area in the framework of a Markov … switching trend model. First, we consider a standard flexible price model with stable money demand, rational expectations, and … erroneous conclusion of an unstable money demand. Second, a more general model allowing for endogeneity and more general …