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A Flow-of-Funds Perspective on the Financial CrisisEuro Area Money Demand and International Portfolio Allocation: A Contribution to Assessing Risks to Price Stability

A Flow-of-Funds Perspective on the Financial Crisis: Euro Area Money Demand and International... [This chapter argues that a stable broad money demand for the euro area over the period 1980–2011 can be obtained by modelling cross- border international portfolio allocation. We first observe that, in this first decade of the new millennium, the breakdown of standard money demand specifications for the euro area and the strong developments in annual M3 growth coincide with large net flows in portfolio invest- ment in the euro area. We then estimate a new money demand, which turns out to be stable, by including variables explaining portfolio flows omitted in the traditional specifications.] http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png

A Flow-of-Funds Perspective on the Financial CrisisEuro Area Money Demand and International Portfolio Allocation: A Contribution to Assessing Risks to Price Stability

Part of the Palgrave Studies in Econmics and Banking Book Series
Editors: Winkler, Bernhard; Riet, Ad van; Bull, Peter
De Santis, Roberto A.; Favero, Carlo A.; Roffia, Barbara
A Flow-of-Funds Perspective on the Financial Crisis — Jan 1, 2014
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Publisher
Palgrave Macmillan UK
Copyright
© Palgrave Macmillan, a division of Macmillan Publishers Limited 2014
ISBN
978-1-349-46944-4
Pages
46 –93
DOI
10.1057/9781137352989_4
Publisher site
See Chapter on Publisher Site

Abstract

[This chapter argues that a stable broad money demand for the euro area over the period 1980–2011 can be obtained by modelling cross- border international portfolio allocation. We first observe that, in this first decade of the new millennium, the breakdown of standard money demand specifications for the euro area and the strong developments in annual M3 growth coincide with large net flows in portfolio invest- ment in the euro area. We then estimate a new money demand, which turns out to be stable, by including variables explaining portfolio flows omitted in the traditional specifications.]

Published: Jan 1, 2014

Keywords: Asset Price; Euro Area; European Central Bank; Money Demand; Price Stability

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