Some Comments on the Stability of the Demand for Money
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Some Comments on the Stability of the Demand for Money
Jüttner, D. Johannes | Tuckwell, Roger H.
Credit and Capital Markets – Kredit und Kapital, Vol. 14 (1981), Iss. 3 : pp. 384–389
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Jüttner, D. Johannes
Tuckwell, Roger H.
References
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Abstract
Some Comments on the Stability of the Demand for Money
The relevance of the demand for money and its stability for the effective implementation of monetary policy has been well documented; empirical estimates and tests of stability are legion. The theoretical bases for the empirical tests have varied considerably both over time and from one study to another, depending on both the state of theoretical wisdom and the structure and idiosyncrasies of particular monetary systems. This paper emphasises the importance of the need for consistency between the theoretical assertions, on the one hand, and the precise form in which they are empirically tested on the other. Inconsistencies of this nature render both the empirical equations and the associated tests of stability of little worth. It is against this background that some empirical formulations of the demand for money in Australia are examined.