Öz

This paper examines the long run and short run dynamics of M2 money demand with effective exchange rate, weighted interest rate of one month term deposits and quarterly seasonally adjusted gross domestic product. Monthly data between 1995Q4-2013Q3 has been taken to estimate linkage between M2 monetary aggregate and macroeconomics factors. The Autoregressive Distributed Lag (ARDL) approach which is accepted as an analytical cointegration techniqueis used to determine the short-run and long-run relationships. According to results we found a long-run and short-run relationship between M2 and interest rate and GDP. CUSUM and CUSUM-Q tests indicate money demand function is stable in the first test, while it’s not stable in the second test even in the long-run and short-run.