BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
Wealth effects and Russian money demand
() and Alexey A. Ponomarenko
Abstract: We examine wealth effects for Russian money demand in a
cointegrated vector autoregressive framework. We find that an aggregate
wealth variable, as well as the components housing and equity prices
included separately, significantly enter the long-run money demand
relationship. There are feedback effects from money to wealth. However, the
remonetization process lead to high income elasticities even when wealth is
included in the model. System instability coincides with the arrival of the
global financial crisis in late 2008.
Keywords: money demand; wealth effects; financial crisis; Russia; (follow links to similar papers)
JEL-Codes: E21; E41; (follow links to similar papers)
31 pages, August 23, 2010
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