Money demand in Hungary and Poland

This paper analyses the determinants and the stability of money demand func tions in Hungary and Poland, using an error-correction framework. The null of stable cointegration relationships cannot be rejected in some specificat ions. The results suggest that long-run parameters are in line with economi c theory. While judging the appropriateness of different strategies of mone tary policy on the basis of these findings alone would be premature, the pa per suggests that money demand functions can serve as a useful reference fo r monetary authorities.