Money Demand and Disinflation in Selected CEECs during the Accession to the EU

Fidrmuc, Jarko (Oktober 2006): Money Demand and Disinflation in Selected CEECs during the Accession to the EU. Münchener Wirtschaftswissenschaftliche Beiträge (VWL) 2006-31

Abstract

A panel data set for six countries (Czech Republic, Hungary, Poland, Romania, Slovakia, and Slovenia) is used to estimate money demand with panel cointegration methods over the recent disinflation period. The basic money demand model is able to convincingly explain the long-run dynamics of M2 in the selected countries. However, money demand is found to have been significantly determined by the euro area interest rates and the exchange rate against the euro, which indicates possible instability of money demand functions in the CEECs. Therefore, direct inflation targeting is an appropriate monetary regime before the eventual adoption of the euro.

• Dokumententyp: Paper
• Keywords: Money demand, panel unit root tests, panel cointegration, direct inflation targeting, CEECs
• Fakultät: Volkswirtschaft ; Volkswirtschaft > Munich Discussion Papers in Economics ; Volkswirtschaft > Munich Discussion Papers in Economics > Geld ; Volkswirtschaft > Munich Discussion Papers in Economics > Statistische Methoden
• Themengebiete: 300 Sozialwissenschaften > 300 Sozialwissenschaft, Soziologie ; 300 Sozialwissenschaften > 330 Wirtschaft
• JEL Classification: E41, E58, C23
• Sprache: Englisch