This paper investigates the stability of M2 demand in Japan using the statistical technique recently developed by Johansen (1988) and Johansen and Juselius (1989). Long-run equilibrium money demand function is identified and estimated along with the fourvariable vector error correction model...

This study investigates the equilibrium relationship between real M1 balances, real GNP and short-term interest rates in Japan since 1955. Although each of these variables appears to be nonstationary, the evidence suggests that there exists a stable, stationary linear combination of the three...