Balanced Growth, the Demand for Money, and Monetary Aggregation

  title={Balanced Growth, the Demand for Money, and Monetary Aggregation},
  author={Apostolos Serletis},
  • Apostolos Serletis
  • Published 2001
  • Economics
  • In this chapter, building on a previous empirical study by King, Plosser, Stock, and Watson (1991), we apply the Johansen (1988) maximum likelihood approach for estimating long-run steady-state relations in multivariate vector autoregressive models, to test the implications of neoclassical stochastic growth theory and traditional money demand theory. As we argued in Chapter 10, the Johansen approach is superior to the Engle and Granger (1987) methodology, because it fully captures the… CONTINUE READING

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