Money Demand in the Netherlands

June 1, 1991

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Format: Chicago

Bob Traa. Money Demand in the Netherlands, (USA: International Monetary Fund, 1991) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper analyzes the demand for narrow money balances in the Netherlands. Demand for narrow money balances had increased markedly in relation to GNP in the Netherlands throughout the 1980s. This phenomenon could not be explained satisfactorily with traditional Goldfeld-type money demand functions which had performed well until that time. Drawing on advances in dynamic modeling from the error corrections and cointegration literature, and incorporating yield-curve effects and the exchange rate of the guilder with the U.S. dollar as additional monetary indicators significantly improves the performance of money demand estimates.

Subject: Asset and liability management, Demand for money, Exchange rates, Financial services, Foreign exchange, Liquidity indicators, Liquidity management, Money, Short term interest rates, Yield curve

Keywords: Demand for money, Deutsche mark, Dollar money balance, Equation reduction process, Exchange rate effect, Exchange rates, Explanatory variable, Global, Interest cum exchange rate adjustment, Liquidity management, Liquidity ratio, Money balance, Money demand, Money demand function, Money demand indicator, Money stock, Narrow money stock, Short term interest rates, Test statistics, WP, Yield curve

Publication Details

Pages:

47
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1991/057
Stock No:

WPIEA0571991
ISBN:

9781451967166
ISSN:

1018-5941

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