Estimating the demand for money in Jamaica: a cointegration approach

Author(s): Craigwell, Roland C (1989)

Created 24 Jul, 1989
Categories Working Papers
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This paper examines the demand for money function in Jamaica using cointegration theory and the error correction mechanism. It discusses the specification of the demand for money function and presents the econometric methodology. Heavy emphasis is placed on diagnostic tests as a means of evaluating model adequacy prior to the examination of the theoretical predictions. Special attention is also drawn to the role of the encompassing principle for model evaluation since an acceptable approximation to the data generation process should be able to explain contending findings. The data and empirical results are given followed by some conclusions.

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