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New Evidence On The Motives For Holding Euro Area Money

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  • GABE J. DE BONDT
Abstract
This study focuses on the role of equity and labour markets for holding euro area money. Equity affects money demand positively through wealth effects (financial transaction motive) and negatively via substitution effects from the expected return on equity (speculative motive). A precautionary motive is captured by the annual change in the unemployment rate. The empirical results show that equity and labour markets do matter for euro area money demand since 1983. This finding is robust across different proxies for the augmented motives and a shorter sample starting in 1994.

Suggested Citation

  • Gabe J. De Bondt, 2010. "New Evidence On The Motives For Holding Euro Area Money," Manchester School, University of Manchester, vol. 78(3), pages 259-278, June.
    • Handle: RePEc:bla:manchs:v:78:y:2010:i:3:p:259-278
    DOI: 10.1111/j.1467-9957.2009.02138.x
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    References listed on IDEAS

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    2. Matteo Barigozzi & Antonio Conti, 2010. "On the Sources of Euro Area Money Demand Stability. A Time-Varying Cointegration Analysis," Working Papers ECARES ECARES 2010-022, ULB -- Universite Libre de Bruxelles.
    3. Matteo Barigozzi & Antonio M. Conti, 2018. "On the Stability of Euro Area Money Demand and Its Implications for Monetary Policy," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 80(4), pages 755-787, August.
    4. Jung, Alexander & Carcel Villanova, Hector, 2020. "The empirical properties of euro area M3, 1980-2017," The Quarterly Review of Economics and Finance, Elsevier, vol. 77(C), pages 37-49.
    5. Chen-Huan Shieh & Shou-Hsiang Liu & Chung-Ching Lee, 2017. "How Stable is the Money Demand in Taiwan?," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 3(5), pages 54-64, 05-2017.
    6. Maciej Ryczkowski, 2015. "Ewolucja pogladow Miltona Friedmana, a ocena polityki pienieznej Fed i EBC w okresie kryzysu finansowego," Working Papers 168/2015, Institute of Economic Research, revised Dec 2015.
    7. Lebre DE Freitas, Miguel, 2022. "International currency substitution and the demand for money in the euro area," Economic Modelling, Elsevier, vol. 117(C).

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