This paper deals with the development and the estimation of a demand for money function for a small
open economy. The determinants of the demand for money function are the foreign exchange rate, the
price level of non-tradeable goods, the interest and the current income. Data for the Greek economy for
the period, first trimester 1975 to last trimester 1984 were used for the estimation of the demand function.
According to the estimations, money is a complement good to the non-tradeable goods, but it is a
substitute to the foreign exchange. Currency substitution exists in the case of Greece during the examination
period. Finally, the demand for money function seems to exhibit economies of scale with respect to
income.
(EN)
Social Sciences ▶ Economics and Business Finance
(EN)
Social Sciences ▶ Economics and Business Commerce
(EN)
University of Peiraeus
