Download This PaperThe Demand for M0 in the United Kingdom Reconsidered: Some Specification Issues
Bank of England Working Paper No. 83
57 Pages Posted: 16 Sep 1998
Date Written: August 1998
Abstract
This paper provides tests of an econometric model of the demand for UK M0. The existence of a long-run cointegrating relationship between M0 and key economic variables is established and a plausible dynamic error-correction model is estimated. A model that passes standard specification tests is achieved without resort to arbitrary proxies for financial innovation. Some of the recent decline in M0 velocity is explained by the move to a lower inflation environment.
JEL Classification: E41
Suggested Citation: Suggested Citation
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