Working Papers,
Copenhagen Business School, Department of Economics

Abstract: This paper examines the relation between monetary asset components and some of the

variables that traditionally enter into aggregate money demand relations. This is done for

Danish data within the natural framework of a multivariate econometric model. The

purpose of the study is to investigate issues in relation to the level and weighting of a

monetary aggregate. We show that within this model it is possible to identify monetary

aggregates at different levels of aggregation and that for the narrow aggregate (M1) equal

weighting of the components are permitted. For the broader aggregates, (M2) or (M2-M1),

equal weighting is no longer appropriate. These findings are not contradictory to what we

would expect from aggregation and index number theory. Finally, the overall identifica-tion

of the stationary (or long-run) structure points towards a co-existence of a liquid and

a less liquid money demand relation which is interpreted as an indication of the

possibility of splitting the total money demand relation with respect to different motives

for holding money.

Keywords: Monetary asset components; Aggregate money demand; Denmark; Demand relation

JEL-codes: E41

24 pages, July 18, 1999

Full text files

7513  

Download statistics

• Copenhagen Business School, Department of Economics
• Ordering Working Papers
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to CBS Library Research Registration Team ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:hhs:cbsnow:1999_006This page generated on 2024-09-13 22:14:19.