Interest free and interestbearing money demand :

Abstract EN

This paper, using quarterly Iranian data for the period 1966-1998, extends the literature by investigating the stability of the interest-free money demand function.

The study also examines the stability of economic agents’ behavior in demanding interest-bearing and interest-free money.

It was found that, contrary to interest-bearing demand for money, both short- and long-run demand for interest-free money functions are stable and their coefficients are invariant with respect to policy and other exogenous shocks, as well as changes in regime.