Modelling of narrow money demand in Australia: an ARDL cointegration approach, 1970-2009

Title: Modelling of narrow money demand in Australia: an ARDL cointegration approach, 1970-2009
Creator: Hossain, Akhtar
Relation: Empirical Economics Vol. 42, Issue 3, p. 767-790
Publisher Link: http://dx.doi.org/10.1007/s00181-011-0452-5
Publisher: Springer
Resource Type: journal article
Date: 2012
Description: Using annual data for the period 1970-2009, this paper deploys the ARDL cointegration approach to determine whether there exists an economically meaningful, stable narrow money demand relationship in Australia. The statistical results suggest the presence of a long-run equilibrium relationship between real narrow money balances, real income, a representative domestic interest rate (e.g., the yield on Australian government short-term bonds) and the nominal effective exchange rate of the Australian dollar. The statistical tests suggest no significant instability in the narrow money demand relationship despite financial deregulation and innovation in Australia since the early 1980s. In contrast, the paper reports statistical results which suggest no meaningful, stable broad money demand relationship in Australia over the sample period.
Subject: narrow money demand; ARDL cointegration approach; money demand instability; monetary policy in Australia
Identifier: http://hdl.handle.net/1959.13/1311794
Identifier: uon:22291
Identifier: ISSN:0377-7332
Language: eng
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