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Stability of the demand for money in Russia in 2001–2019

Vol. 26, Iss. 10, OCTOBER 2020

PDF  Article PDF Version

Received: 17 August 2020

Received in revised form: 31 August 2020

Accepted: 14 September 2020

Available online: 29 October 2020


JEL Classification: E41, E51

Pages: 2328–2345


Artsruni R.A. Russian Presidential Academy of National Economy and Public Administration (RANEPA), Moscow, Russian Federation

ORCID id: not available

Subject. This article investigates the stability of the money demand in Russia over the 2001Q1 to 2019Q4 period.
Objectives. Using econometric tools, the article estimates the long-and short-term relationships between monetary aggregates and their determinants.
Methods. For the study, I used the Johansen cointegration test, Vector Error Correction Model (VECM), and the Wald test.
Results. The article presents the results of an analysis of the relationships between money demand for M1 and M2 money supply.
Conclusions. Understanding the demand for money can be useful if the central bank uses an unconventional monetary policy to regulate zero interest rate. The money demand function may tell how much it is necessary to deflate to raise the interest rate above zero.

Keywords: money demand, Johansen test, cointegration, VECM


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Vol. 26, Iss. 10
October 2020