Panel estimates of money demand for thirty-five mainly developing economies were compared with similar country by country estimates using M2. The objective is to compare the panel and individual country money demand equations out of sample forecast to see whether the efficiency gains afforded by...

Among the many troublesome econometric relationships, the demand for money has proved especially recalcitrant, as evidenced by a long history of tinkering with basic specifications, always in response to some recent perceived forecast failure. The shortcomings of this approach and an alternative...