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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

Abstract

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

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