DP9962 Money Demand in Ireland, 1933-2012

Author(s): Stefan Gerlach, Rebecca Stuart
Publication Date: May 2014
Keyword(s): historical statistics, income, Ireland, long time series, money, prices
JEL(s): E3, E4, N14
Programme Areas: International Macroeconomics, Economic History
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=9962

Using annual data from several sources, we study the evolution of M1, M2, income, prices and long and short interest rates in Ireland over the period 1933-2012. We find cointegration and that prices, income and interest rates are weakly exogenous. While the estimates for M2 are stable and close to our priors, for M1 we obtain very low price elasticities, and a relatively high income elasticity, and detect parameter instability. We estimate a short-run M2 demand function that passes a number of diagnostic tests, although the standard errors of the regressions is large.