Levent, Korap (2008): Modeling base money demand and inflation for the Turkish economy. Published in: Doğuş University Journal , Vol. 9, No. 2 (2008): pp. 207216.

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Abstract
In this paper, a reserve money demand model is tried to be constructed for the Turkish economy. Using contemporaneous multivariate cointegration methodology for the investigation period 1987Q12007Q3 of the quarterly observations, we find that the real income elasticity of money demand is highly greater than unity which means that there exists an ongoing monetization process with regard to the increases in the real income in the economy. The most important alternative cost against the real money holdings seems to be the expected depreciation rate of the domestic currency against the exchange rate. Such a finding reveals the importance of currency substitution phenomenon dominated in the economy when the economic agents determine the motives of demand for monetary balances. Furthermore, a critical finding estimated in the paper is that domestic inflation has a weakly exogenous characteristic in the money demand variable space which requires no dynamic error correction model constructed on domestic inflation as a function of the excess money demand taken place under the money market disequilibrium conditions.
Item Type:  MPRA Paper 

Original Title:  Modeling base money demand and inflation for the Turkish economy 
English Title:  Modeling base money demand and inflation for the Turkish economy 
Language:  English 
Keywords:  Money demand ; Inflation ; Currency substitution ; Cointegration 
Subjects:  C  Mathematical and Quantitative Methods > C3  Multiple or Simultaneous Equation Models; Multiple Variables > C32  TimeSeries Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models E  Macroeconomics and Monetary Economics > E3  Prices, Business Fluctuations, and Cycles > E31  Price Level; Inflation; Deflation E  Macroeconomics and Monetary Economics > E4  Money and Interest Rates > E41  Demand for Money 
Item ID:  19617 
Depositing User:  Levent Korap 
Date Deposited:  30. Dec 2009 10:02 
Last Modified:  12. Feb 2013 10:54 
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URI:  http://mpra.ub.unimuenchen.de/id/eprint/19617 