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Policy Uncertainty and the Demand for Money in Canada: A Nonlinear Approach

Policy Uncertainty and the Demand for Money in Canada: A Nonlinear Approach
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Year:    2018

Author:    Bahmani-Oskooee, Mohsen, Nayeri, Majid Maki

Applied Economics Quarterly, Vol. 64 (2018), Iss. 4 : pp. 279–295

Abstract

Abstract

Economic uncertainty is said to affect the demand for money in either direction. We use the new comprehensive measure of policy uncertainty and assess its impact on the demand for money in Canada. When a linear model was used, we found only short-run effects of uncertainty on Canadian cash holdings. However, when a nonlinear model was used, the results revealed that increased policy uncertainty has negative effect on the demand for money in the long run but decreased uncertainty has no effect, a clear sign of an asymmetric response by the public.

JEL classifications: E41

Keywords: Canada, Money Demand, Policy Uncertainty, Asymmetry, Nonlinear ARDL

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Journal Article Details

Publisher Name:    Global Science Press

Language:    English

DOI:    https://doi.org/10.3790/aeq.64.4.279

Applied Economics Quarterly, Vol. 64 (2018), Iss. 4 : pp. 279–295

Published online:    2018-12

AMS Subject Headings:    Duncker & Humblot

Copyright:    COPYRIGHT: © Global Science Press

Pages:    17

Author Details

Bahmani-Oskooee, Mohsen

Nayeri, Majid Maki

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Section Title Page Action Price
Mohsen Bahmani-Oskooee / Majid Maki Nayeri: Policy Uncertainty and the Demand for Money in Canada: A Nonlinear Approach 1
Abstract 1
1. Introduction 1
2. The Models and Methods 3
3. The Results 7
4. Concluding Remarks 1
Appendix: Data Definition and Sources 1
References 1