When researchers investigate this

issue, the cumulative sum of recursive residuals (CUSUM) and the cumulative sum of
squares of recursive residuals (CUSUMSQ) tests have been used most frequently (see
Bahmani-Oskooee and Shin, 2002; Quayyum, 2005; and Owoye and Onafowora, 2007).
Based on the break points in the dataset, the CUSUM and CUSUMSQ statistics are
recursively updated and plotted with 5 percent critical boundaries. If the plotted
statistics stay
within the +5 percent boundaries during the investigated period, the money demand
function
is said to be stable (Diu & PFAU )