THE DEMAND FOR CURRENCY IN MALTA
This article studies the demand for one particular component of the money stock, currency, in Malta in the light of the existing theoretical and empirical frameworks. In particular, it argues that the commonly applied analytical framework needs to be tweaked slightly for it to explain better the reasons underpinning the relatively high currency demand in Malta compared with other euro area countries. In particular, the presence of a large tourism sector is likely to be boosting demand beyond what one would expect. Similarly the presence of a significant shadow economy appears to be exerting some influence on the magnitude of currency holdings. That said, this study suggests that there is scope for a number of policies which could lead to lower demand for notes, particularly measures to facilitate the use of electronic means of payment and efforts to discourage the shadow economy.
 Briguglio, L. (1989). Factors affecting the ratio of currency demand to total monetary assets in Malta, International Conference on Applied Statistics, Middle East Business and Economic Association, Cairo: January 1989.
 Cagan, P. (1958). The demand for currency relative to the total money supply, Journal of Political Economy, 66(4): 303-328. http://dx.doi.org/10.1086/258056
 Caruana, K. and Pace, C. (2013). Household Finance and Consumption Survey in Malta: main results of 2010 exercise, Working Paper, Central Bank of Malta.
 Cassar, A. (2001). An index of the underground economy in Malta, Bank of Valletta Review, 23(2): 44-62.
 Delia, E.P. (1978). Focus on Aspects of the Maltese Economy, Malta: Midsea Books.
 Fisher, I. (1911). The purchasing power of money, New York: Macmillan.
 Friedman, M. (1956). The quantity theory of money – a restatement in Studies in the Quantity Theory of Money, M. Friedman (ed.), Chicago: University of Chicago.
 Gordon, R.J. (1984). The short-run demand for money: a reconsideration, Journal of Money, Credit and Banking, 16(1): 403-434. http://dx.doi.org/10.2307/1992181
 Grech, A.G. (2003). The framework of monetary policy in Malta, MPRA Paper 33464, University Library of Munich, Germany.
 Guttman, P.M. (1977). The subterranean economy, Financial Analysts Journal, 33(6): 26-27.
 Kearney, A.T., Schneider, F. (2012). The shadow economy and work in the shadow: what do we (not) know?, Discussion Paper IZA DP No.6423, Institute for the Study of Labor, Germany
 Keynes, J.M. (1936). The general theory of employment, interest and money, London and New York: Macmillan.
 Laidler, D.E.W. (1993). The demand for money: theories, evidence and problems, 4th edition, New York: HarperCollins College Publishers.
 Marshall, A. (1923). Money, credit and commerce, London: Macmillan.
 Pigou, A.C. (1917). The value of money, The Quarterly Journal of Economics, 37: 38-65. http://dx.doi.org/10.2307/1885078
 Schneider, F. (2007). The shadow economy in Europe, 2011, European Commission, European Employment Observatory Review.
 Singh, A., Jain-Chandra, S., Mohammad, A. (2012). Out of the shadows, Finance and Development, 49(2): 42-45.
 Smith, P. (1994). Assessing the size of the underground economy: the Canadian statistical perspective, Canadian Economic Observer, 11(10): 16-33.
 Sriram, S.S. (1999). Survey of literature on demand for money: theoretical and empirical work with special reference to error-correction models, WP/99/64, International Monetary Fund.
 Tanzi, V. (1983). The underground economy in the United States: annual estimates, 1939-80, IMF Staff Papers, 30(2): 283-305.
The Copyright Transfer Form to ASERS Publishing (The Publisher)
This form refers to the manuscript, which an author(s) was accepted for publication and was signed by all the authors.
The undersigned Author(s) of the above-mentioned Paper here transfer any and all copyright-rights in and to The Paper to The Publisher. The Author(s) warrants that The Paper is based on their original work and that the undersigned has the power and authority to make and execute this assignment. It is the author's responsibility to obtain written permission to quote material that has been previously published in any form. The Publisher recognizes the retained rights noted below and grants to the above authors and employers for whom the work performed royalty-free permission to reuse their materials below. Authors may reuse all or portions of the above Paper in other works, excepting the publication of the paper in the same form. Authors may reproduce or authorize others to reproduce the above Paper for the Author's personal use or for internal company use, provided that the source and The Publisher copyright notice are mentioned, that the copies are not used in any way that implies The Publisher endorsement of a product or service of an employer, and that the copies are not offered for sale as such. Authors are permitted to grant third party requests for reprinting, republishing or other types of reuse. The Authors may make limited distribution of all or portions of the above Paper prior to publication if they inform The Publisher of the nature and extent of such limited distribution prior there to. Authors retain all proprietary rights in any process, procedure, or article of manufacture described in The Paper. This agreement becomes null and void if and only if the above paper is not accepted and published by The Publisher, or is with drawn by the author(s) before acceptance by the Publisher.