Money demand instability, expectations and policy regimes: A note on the case of Italy: 1964–1986

This paper compares the stability performance of feedback and feedforward specifications of the demand for M2 in Italy over the period 1962–1986. A clear change in the monetary policy regime occurred in 1969/1970, together with marked breaks in the processes generating several relevant variables in...

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Bibliographic Details
Published inJournal of banking & finance Vol. 16; no. 2; pp. 331 - 349
Main Authors Bagliano, Fabio-Cesare, Favero, Carlo A.
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.04.1992
Elsevier
North-Holland Pub. Co
Elsevier Sequoia S.A
SeriesJournal of Banking & Finance
Subjects
Changes
Demand for money
Econometrics
Economic models
Expectation
Impacts
Italy
Monetary policy
Money supply
Italy
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Summary:This paper compares the stability performance of feedback and feedforward specifications of the demand for M2 in Italy over the period 1962–1986. A clear change in the monetary policy regime occurred in 1969/1970, together with marked breaks in the processes generating several relevant variables in the mid-'70s, making this period particularly appropriate for the investigation of the potential role of expectations. Our main results show that the feedback specification suffers from instability at both relevant dates, whereas the feedforward specification is remarkably stable during the policy regime change, but displays signs of instability during the mid-'70s.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0378-4266
1872-6372
DOI:10.1016/0378-4266(92)90018-U