Why Has Broad Money Demand Been More Stable in the Euro Area than in Other Economies? A Literature Review

29 Pages Posted: 26 Jan 2004

See all articles by Alessandro Calza

Alessandro Calza

European Central Bank (ECB)

João Sousa

European Central Bank (ECB)

Date Written: September 2003

Abstract

Based on a literature review, this paper investigates the reasons why broad money demand has usually been found to be more stable in the euro area than in other large economies. The paper concludes that there are three main explanations for this fact. First, in some countries outside the euro area the sources of instabilities in money demand were country-specific. Second, financial innovation appears to have had a weaker impact on money demand in the euro area than in other economies. A third explanation is that there are gains in terms of stability in aggregating the money demand of the individual euro area countries.

Keywords: Money demand, financial innovation, aggregation, euro area

JEL Classification: E41, C22, C32

Suggested Citation

Calza, Alessandro and Soucasaux Meneses e Sousa, João Miguel, Why Has Broad Money Demand Been More Stable in the Euro Area than in Other Economies? A Literature Review (September 2003). Available at SSRN: https://ssrn.com/abstract=457529 or http://dx.doi.org/10.2139/ssrn.457529

Alessandro Calza (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
0049 69 13440 (Phone)
0044 69 1344 6000 (Fax)

João Miguel Soucasaux Meneses e Sousa

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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