摘要：Chile’s recent switch to an autonomous central bank makes it essential to understand the determinants of money demand. This paper has added to the existing literature on money demand in Chile in two dimensions. First, we study the major determinants of M2 money demand in addition to those of M1 demand. Secondly, as Chile is an emerging open economy, it is argued that the failure to identify stable conventional money demand functions may arise from the omission of the nominal effective exchange rate. It is found that income and the interest rate are not sufficient for the formulation of a long-run stable demand for M1 and M2 money in Chile. In order to identify a long-run stable money demand function for M1 and M2, the nominal effective exchange rate should be incorporated. An interesting result is that the exchange rate measure affects the demand for M1 and M2 money differently. In particular, it appears that currency depreciation in Chile may lead to a shift from M1 into M2, as well as into foreign currency. The results of this paper provide the central bank of Chile with useful information.
