Analiza funkcije tražnje za novcem u Bosni i Hercegovini
Analysis of Money Demand Function in Bosnia and Herzegovina

Summary/Abstract: This paper aimed to test the money demand function in Bosnia and Herzegovina. It also aimed to perform empirical analysis of factors that influenced it. Modeling was based on classic approach that money demand depends on the level of economic activity and opportunity cost of holding money. In this case, gross domestic product was used as an indicator of economic activity; interest rate on time and saving deposits to households in KM as opportunity cost of holding money, while money is presented by monetary aggregate M1 and consists of currency and short term deposits in KM. All variables were transformed in logarithm values and deflated by consumer price index. Econometric analysis of money demand function was conducted through ordinary least squares method in E-Views 6, MS Office Excel and SPSS 17. Results showed that regression was significant while all coefficients had expected signs. Classic assumptions for stochastic component of linear regression model were also satisfied which was validated through tests of autocorrelation, heteroscedasticity, normality and multicolinearity.

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