The Financial Transactions Motive in the Dutch Money Demand Function

The Financial Transactions Motive in the Dutch Money Demand Function In this article empirical evidence on the Dutch money demand function is shown. The importance of wealth effects on money demand both in the short- and long run is stressed. The long run money demand equations have been tested on their equilibrium properties. Corresponding short run equations have been modelled in Error Correction Models. It is shown that the macro money demand function needs a disaggregation into assets and sectoral demand functions in order to understand the recent increase in Dutch money demand