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219 | The Demand for Money in Israel in the New Millennium money demand function in the new millennium . This is the subject of Section 2 . Indeed, we find that such a change has occurred, and we offer a possible explanation for this change . We then proceed to estimate the demand for money in the 2000 - 2019 period ( Section 3 ) using the cointegration and ARDL estimation techniques . Conclusions are provided in Section 4 . The Demand for Money 1992 – 2019 The purpose of this section is to examine whether a shift in the money demand has occurred in our sample period 1992 - 2019 . 2 We start with the standard form of the money demand equation : M * = a 0 + a 1 GDP + a 2 R + e 1 ) 1 ( This equation shows the desired level ( M * ) of real money holdings given the level of real income ( GDP ) and interest rate ( R ) . 3 However, the adjustment of actual level of money holdings Mto its desired level M * takes time, and only a portion ( g ) of the gap between M and M * is closed in any give...
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