The notion that real money balances is a factor input has attracted considerable amount of attention from researchers and academicians. However, the debate is controversial and the consensus has yet to be developed. This issue becomes more important when a country follows contractionary monetary...

Innovation in financial sector, financial reforms and changes in the policy environment are the factors responsible for instability in the money demanded in an economy. The dawn of 1991 balance of payment crisis in India brought much needed reforms in the economy and financial sector and...

We develop a simple test to show that the ECB's monetary benchmark serves as an anchor for financial markets. This result is more pronounced for the financial crisis 2007-2009 and when looking at longer-term forecasts. However, for non-EMU forecasters we do not find an anchoring effect.

In this paper, using an IS-LM model with reserve market, we examine weather the operating procedure actually adopted by many central banks in the world, i.e. targeting directly short run interest rates and hence indirectly market interest rates, is more efficient in stabilizing output than a...

Superneutrality is demonstrated to no longer hold in the Sidrauski model as soon as agents are heterogenous with regard to their productivity. However, quantitative effects of inflation on the capital stock are found to be rather small.

This investigation puts the interest rate pass-through mechanism from policy to deposit rates in the EMU under closer scrutiny. By using the newly developed nonlinear ARDL framework of Shin et al. (2011), we are able to estimate asymmetric long-run as well as short-run coefficients. Previous...

It has become common practice in applied monetary economics to posit an interest rate rule as a component of the economic environment. Since the general equilibrium setting imposes a money demand relationship, the interest rate rule implies that the money supply is endogenous. Rarely are the...

The aim of the paper is to understand how the financial crisis has affected the interest rate pass-through (PT) in the Eurozone between market rates and bank interest rates. We have applied a SUR-ECM model. This methodology allows testing for the homogeneity of the PT of the euro area countries....

In this study we compare the forecasting ability of the simple sum and Divisia monetary aggregates with respect to U.S. gross domestic product. We use two alternative Divisia aggregates, the series produced by the Center for Financial Stability (CFS Divisia) and the ones produced by the Federal...

This paper estimates the demand for money in the U.S. within a model where the money supply function is also considered simultaneously. The explanatory variables for the money demand function include a measure of the interest rate, real income and the exchange rate. The explanatory variables for...