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Testing for the stability of money demand in Italy: has the Euro influenced the monetary transmission mechanism?

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  • Salvatore Capasso
  • Oreste Napolitano
Abstract
Stability of money demand is a crucial issue for the efficacy of monetary policy. This is particularly true in the presence of significant exogenous shocks to the monetary system. By implementing the most recent econometric testing procedures, this article intends to investigate the consistency of the stability of money demand in Italy, one of the larger European Monetary Union (EMU) countries, before and after the EMU. Among others, the objective is, indeed, to ascertain the effect of a change in the currency regime on the monetary aggregates and to provide a valid empirical model which is a viable tool for policy performance.

Suggested Citation

  • Salvatore Capasso & Oreste Napolitano, 2012. "Testing for the stability of money demand in Italy: has the Euro influenced the monetary transmission mechanism?," Applied Economics, Taylor & Francis Journals, vol. 44(24), pages 3121-3133, August.
    • Handle: RePEc:taf:applec:44:y:2012:i:24:p:3121-3133
    DOI: 10.1080/00036846.2011.570719
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    3. Vittorio Daniele & Pasquale Foresti & Oreste Napolitano, 2017. "The stability of money demand in the long-run: Italy 1861–2011," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 11(2), pages 217-244, May.
    4. Haider Mahmood & Mohammad Asif, 2016. "An empirical investigation of stability of money demand for GCC countries," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 11(3), pages 274-286.
    5. Claudiu Tiberiu Albulescu & Dominique Pépin, 2018. "Money demand stability, monetary overhang and inflation forecast in the CEE countries," Working Papers hal-01720319, HAL.
    6. Nicholas Apergis, 2015. "Long-run estimates of money demand: new evidence from East Asian countries and the presence of structural breaks," Applied Economics, Taylor & Francis Journals, vol. 47(31), pages 3276-3291, July.
    7. Chaido Dritsaki & Melina Dritsaki, 2020. "The Long-run Money Demand Function: Empirical Evidence from Italy," International Journal of Economics and Financial Issues, Econjournals, vol. 10(1), pages 186-195.

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