This paper is written by Hongyi Chen (Hong Kong Institute for Monetary and Financial Research) and Pierre Siklos (Wilfrid Laurier University and Balsillie school of International Affairs).Digitalization, spurred by the pandemic, has accelerated plans by many central banks to introduce retail...

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...

The monetary authorities of emerging market economies tend to emphasize the studies that find instabilities in the money demand functions and use them as the main pretext for formulating monetary policy strategies in which monetary aggregates play no prominent role. In this study, however, we...

A money demand function for M2 is estimated for Italy for the period 1972-1998 within an error correction framework. This period has been characterized by major structural changes in the Italian financial system and by major changes in monetary policy. This study takes these changes into...

A transactions model of the demand for multiple media of exchange is developed. Some results are expected, and others are both new and surprising. There are both extensive and intensive margins to currency substitution, and inflation may affect the two margins differently, leading to subtle...

This paper investigates whether the quantity theory of money is still alive. We demonstrate three insights. First, for countries with low inflation, the raw relationship between average inflation and the growth rate of money is tenuous at best. Second, the fit markedly improves, when correcting...