The Impact of Banking Crises on Money Demand and Price Stability
The author empirically investigates the monetary impact of banking crises in Colombia, Chile, Denmark, Japan, Kenya, Malaysia, and Uruguay. She uses co-integration analysis and error correction modeling to research: 1) Whether money demand stabilit...
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Online Access: | http://documents.worldbank.org/curated/en/2000/03/437908/impact-banking-crises-money-demand-price-stability http://hdl.handle.net/10986/22356 |
| Summary: | The author empirically investigates the
monetary impact of banking crises in Colombia, Chile,
Denmark, Japan, Kenya, Malaysia, and Uruguay. She uses
co-integration analysis and error correction modeling to
research: 1) Whether money demand stability is threatened by
banking crises. 2) Whether crises bring about structural
breaks in the relationship between monetary indicators and
prices. Overall, she finds no systematic evidence that
banking crises cause money demand instability. Nor do the
results consistently support the notion that the
relationship between monetary indicators and prices
undergoes structural breaks during crises. However, although
individual coefficients in price equations do not seem to be
severely affected by crises, crises can sometimes give rise
to variance instability in price or inflation equations. |
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