Skip to main content
Article thumbnail
Location of Repository

Demand for Money in the Selected OECD Countries: A Time Series Panel Data Approach and Structural Breaks

By Saten Kumar, Mamta Chowdhury and B. Bhaskara Rao


Time series panel data estimation methods are used to estimate cointegrating equations for the demand for money (M1) for a panel of 11 OECD countries. The effects of financial reforms are analysed with structural break tests and estimates for alternative sub-samples. Our results in the post-reforms sub-samples show that the income elasticity of the demand for money has decreased and response to interest rate changes has increased.Demand for money; Pedroni FMOLS; financial reforms

OAI identifier:

Suggested articles


  1. (2003). A re-examination of the Japanese money demand function and structural shifts,’
  2. (2001). A survey of recent empirical money demand studies,’
  3. (2009). An empirical analysis of the money demand function in ASEAN-5,’
  4. and Rehman, H.(2005) ‘Stability of the money demand function in Asian developing countries,’
  5. (2001). Another look at long-run money demand,’
  6. (1996). Breaks in money demand,’
  7. (2003). Cointegration vector estimation by panel DOLS and longrun money demand,’
  8. (2003). Demand for M2 in developing countries: an empirical panel investigation,’
  9. (2009). Demand for money in
  10. (2009). Demand for money in the Asian countries: a systems GMM panel data approach and structural breaks,’ available at
  11. (2005). Econometric Analysis of Panel Data,
  12. (2008). Empirical analysis of the money demand function in
  13. (2006). Empirical evidence for a money demand function” a panel data analysis of 27 countries
  14. (1993). Financial deregulation and the dynamics of money, prices, and output in
  15. (2005). Fractional cointegration and aggregate money demand functions,’
  16. (2000). Fully modified OLS for the heterogeneous cointegrated panels,
  17. (1983). Functional and structural breaks in the UK demand for money function: 1963–1979,’
  18. (2009). How stable is the demand for money in African countries,’
  19. (1995). Is the ALP long-run demand function stable? Banco de Espana, Documento de Trabajo,
  20. (2009). Is the US demand for money unstable?’ available at ---------------------------------(2009b) ‘A panel data approach to the demand for money and the effects of financial reforms in the Asian countries,’
  21. (2006). Is there a Euro effect on trade? An application of end-of-sample structural break tests for panel data,’ HEI Working Paper No 04, Economics Section, The Graduate Institute of International Studies.
  22. (2008). Long and short run determinants of the demand for money in the Asian-Pacific countries: an empirical panel investigation,’
  23. (2008). Long-run money demand in Latin-American countries: nonestationary panel data approach,’ available at
  24. (2007). Long-run money demand in the new EU member states with exchange rate effects,’
  25. (2009). Money demand and disinflation in selected CEECs during the accession to the EU,’
  26. (1998). Money demand and stability: evidence from
  27. (2004). Money demand function: a heterogeneous panel application,’
  28. (1999). Money demand functions: data span and tests,’ available at
  29. (2009). Money demand in the euro area: new insights from disaggregated data,’ available at
  30. (1992). Money, income, prices, and interest rates,’American
  31. (2006). Multivariate panel cointegration models and money demand function,’ available at
  32. Nonstationary panels, panel cointegration, and dynamic panels,’
  33. (2004). Recent developments in understanding the demand for money,’
  34. (1999). Spurious regression and residual-based tests for cointegration in panel data,’
  35. (2006). Testing for panel cointegration with multiple structural breaks,’
  36. (2000). Testing for stationarity in heterogeneous panel data,’
  37. (2003). Testing for unit roots in heterogeneous panels,’
  38. (2007). The demand for money around the end of civil wars,’ available at
  39. (1997). The demand for money in Greece: further empirical results and policy implications,’
  40. (2006). The equilibrium relationship among money, income, prices, and interest rates: evidence from a threshold cointegration test,’
  41. (2000). The local power of some unit root tests for panel data, in Baltagi,
  42. (1991). The long-run demand for money, Canada savings bonds and treasury bills in Canada,’ available at
  43. (1956). The monetary dynamics of hyperinflation.’ In: Friedman M (Ed), Studies in the quantity theory of money,
  44. (1970). The optimal choice of monetary policy instruments in a simple macro model,’
  45. (2004). UK money demand 1873-2001: a cointegrated VAR analysis with additive data corrections,’
  46. (2002). Unit root tests in panel data: asymptotic and finite sample properties,’
  47. (2005). Unit roots and cointegration in panels,’

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.