Money growth volatility and the demand for money in Germany: Friedman's volatility hypothesis revisited

Arbeitspapier

Recently, the Bundesbank claimed that monetary targeting has become considerably more diffcult by the increased volatility of short-term money growth. The present paper investigates the impact of German money growth volatility on income velocity and money demand in view of Friedman's money growth volatility hypothesis. Granger-causality tests provide some evidence for a velocity-volatility linkage. However the estimation of volatility-augmented money demand functions reveals that - in contrast to Friedman's hypothesis - increased money growth volatility lowered the demand for money.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SFB 373 Discussion Paper ; No. 1997,23

Classification and Topics

• Classification: Wirtschaft
• Subject: ARCH models ; Money growth volatility ; demand for money

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Brüggemann, Imke ; Nautz, Dieter
• Event: Veröffentlichung
• (who): Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes
• (where): Berlin
• (when): 1997

Further information

• Handle: http://hdl.handle.net/10419/66299
• URN: urn:nbn:de:kobv:11-10064097
• Last update: 10.03.2025, 11:42 AM CET