Household Money Holdings in the Euro Area: An Explorative Investigation

49 Pages Posted: 17 Sep 2010

See all articles by Franz Seitz

Franz Seitz

Technical University of Applied Sciences Weiden

Julian von Landesberger

European Central Bank (ECB)

Date Written: August 23, 2010

Abstract

In this paper we analyse household holdings of the broad monetary aggregate M3 in the euro area from 1991 until 2009. We develop four models, two in nominal, two in real terms, with satisfactory economic and statistical properties. The main determinants are a transactions variable, wealth considerations, opportunity costs and uncertainty. The models are robust to different estimation strategies, samples considered and a multitude of mis-specification tests. The exercise also provides insights that go beyond the portfolio allocation decision of households. According to our analysis, it is quite apparent that in equilibrium, households jointly determine consumption and broad money holdings both influenced by wealth as well as interest rates.

Keywords: money demand, cointegrated VARs, households

JEL Classification: E41, C23, C32, D21

Suggested Citation

Seitz, Franz and von Landesberger, Julian, Household Money Holdings in the Euro Area: An Explorative Investigation (August 23, 2010). ECB Working Paper No. 1238, Available at SSRN: https://ssrn.com/abstract=1663581

Franz Seitz (Contact Author)

Technical University of Applied Sciences Weiden ( email )

Hetzenrichter Weg 15
D-92637 Weiden i.d. Opf
Germany
(49) 961-382-1318 (Fax)

Julian Von Landesberger

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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