Money Demand in Europe

In 1999 a number of member states of the European Union will adopt a common currency. This change in the monetary system requires that a Eur opean Central Bank is set up and a common monetary policy is pursued. There is general agreement among those countries which are likely to join the common currency that price level stability has to be the ultimate objec tive of monetary po1icy. It is an open issue, however, what kind of policy is best suited for that purpose. The alternative strategies under discussion are a direct inflation targeting, an intermediate monetary targeting or a mixture of both. For these policy strategies a stable money demand relation is of cen tral importance. Therefore a workshop on Money Demand in Europe was organized at the Humboldt University in Berlin on October 10/11, 1997. This research conference brought together academic and central bank econo mists and econometricians predominantly from Europe to discuss issues on specification, estimation and, in particular, stability of money demand rela tions both in a single equation and in a systems framework. In this volume revised versions of the papers presented and discussed at the workshop are collected. The volume thereby gives an overview of money demand analysis in Europe on the eve of the introduction of the Euro in some European countries. It contributes to the discussion on a suitable monetary policy for the new European Central Bank.

Inhalt
Methodological studies.- Exogeneity, causality, and co-breaking in economic policy analysis of a small econometric model of money in the UK.- Empirical modeling of money demand.- Single country studies.- Stability of the demand for M1 and harmonized M3 in Finland.- The demand for broad money in Norway, 19691993.- The stability of German money demand: Not just a myth.- A money demand system for German M3.- Money demand stability: Evidence from Spain.- Friedman and Schwartz (1982) revisited: Assessing annual and phase-average models of money demand in the United Kingdom.- Broad money demand and financial liberalization of Greece.- Stability of money demand in Switzerland A comparison of the M2 and M3 cases.- Multi-country studies.- Changing monetary transmission mechanisms within the EU.- Long run money demand in the EU: Evidence for area-wide aggregates.- Wealth and the demand for money in the European union.- Workshop Money demand in Europe: List of participants.