Broad Money Demand and Financial Liberalization in Greece

20 Pages Posted: 9 Sep 1998

See all articles by Neil R. Ericsson

Neil R. Ericsson

Board of Governors of the Federal Reserve System

Sunil Sharma

George Washington University - Elliott School of International Affairs

Abstract

This paper develops a constant, data-coherent, equilibrium correction model for broad money demand (M3) in Greece over 1976-1994. The aggregate M3 was targeted until recently, and current monetary policy still uses such aggregates as guidelines. In spite of financial innovation, financial liberalization, and large fluctuations in the inflation rate, the estimated model is remarkably stable. Dynamics are important, with price and income elasticities being much smaller in the short run than in the long run. The model provides a better understanding of the portfolio consequences of financial innovation and the effects of monetary policy in Greece.

JEL Classification: E41, E5

Suggested Citation

Ericsson, Neil R. and Sharma, Sunil, Broad Money Demand and Financial Liberalization in Greece. Available at SSRN: https://ssrn.com/abstract=123498 or http://dx.doi.org/10.2139/ssrn.123498

Neil R. Ericsson (Contact Author)

Board of Governors of the Federal Reserve System ( email )

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Washington, DC 20551
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202-452-3709 (Phone)
202-736-5638 (Fax)

Sunil Sharma

George Washington University - Elliott School of International Affairs ( email )

Institute for International Economic Policy
1957 E Street NW
Washington, DC 20052
United States

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