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The current discussion about stability of the European money demand function is flawed by a confusion of two different … concepts of stability (adjustment speed versus error variance). The meaning and importance of the underlying notions of … stability is clarified. It is demonstrated that necessary and sufficient conditions for the two types of stability are mutually …
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Using a modified version of the model presented by Belke and Gros (2007), we analyze the stability of adjustment in a … currency union. Using econometric estimates for parameter values we check the stability conditions for the 11 original EMU …
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