Empirical models for money holdings are applied for two purposes. First, they are used to guide the analysis of monetary developments, as a means of quantifying the contribution of various economic determinants to money growth in order to provide a deeper understanding of the causes of money growth. This is necessary in order to develop a view of underlying monetary expansion. Second, the models provide a normative framework to assess whether the stock of money in the economy is consistent with price stability and to interpret the nature of deviations from this norm. An understanding of why the money stock.
