Modelling money demand in the Dominican Republic

The paper models money demand in the Dominican Republic using a novel, automatic general-to-specific, econometric technology - PcGets. The study finds economically sensible long run relations for real M1 and M2. Likewise, meaningful short run money demand functions are estimated. Remarkably, the corresponding rolling equilibrium correction adjustment coefficients imply a highly fine-tuned monetary policy stance in the late 1990s. This feature, however, fades after that period, probably due to time consistency problems (e.g. fiscal dominance).