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Forecasting with money demand functions: the UK case
Author(s) -
GarciaFerrer Antonio,
Novales Alfonso
Publication year - 1998
Publication title -
journal of forecasting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.543
H-Index - 59
eISSN - 1099-131X
pISSN - 0277-6693
DOI - 10.1002/(sici)1099-131x(199803)17:2<125::aid-for679>3.0.co;2-j
Subject(s) - economics , demand for money , sample (material) , monetary policy , demand forecasting , econometrics , monetary economics , macroeconomics , operations management , chemistry , chromatography
Money demand functions have long been known to be frequently subject to structural change. Since their use for optimal monetary policy design is basically a forecasting exercise, it is crucial to analyse the effect of time instability on the quality of their forecasts. We discuss in this paper whether instability of demand for money functions precludes their use for policy experiments, analysing a 1963–84 sample for the UK which has been widely used in the literature. © 1998 John Wiley & Sons, Ltd.