Empirical evidence for a money demand functiona panel data analysis of 27 countries in 1988-98

  1. GARCIA-HIERNAUX, Alfredo 1
  2. CERNO, Leonel 2
  1. 1 Facultad de Ciencias Económicas y Empresariales, Campus de Somosaguas, Madrid,
  2. 2 Universidad Europea de Madrid
    info

    Universidad Europea de Madrid

    Madrid, España

    ROR https://ror.org/04dp46240

Journal:
Applied econometrics and international development

ISSN: 1578-4487

Year of publication: 2006

Volume: 6

Issue: 1

Pages: 51-58

Type: Article

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More publications in: Applied econometrics and international development

Abstract

The purpose of this paper is to estimate the money demand function of Cagan (1956) using a panel data set covering 27 countries with different economic levels over the period 1988-98. The static and dynamic fixed effects reveal that a money demand equation exists. However, in contrast to the theory proposed by Cagan, estimates of the output elasticity of money demand are in the range from 0.18 to 0.20.

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