Another Look at Long-run Money Demand PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download Another Look at Long-run Money Demand PDF full book. Access full book title Another Look at Long-run Money Demand by Laurence M. Ball. Download full books in PDF and EPUB format.
Author: Laurence M. Ball
Publisher:
ISBN:
Category : Demand for money
Languages : en
Pages : 14
Get Book Here
Book Description
This paper investigates the long-run demand for M1 in the postwar United States. Previous studies, based on data ending in the late 1980's, are inconclusive about the parameters of postwar money demand. This paper obtains precise estimates of these parameters by extending the data through 1996. The income elasticity of money demand is approximately 0.5, and the interest semi-elasticity is approximately -0.05. These parameters are significantly smaller in absolute value than the corresponding parameters for the prewar period
Author: Laurence M. Ball
Publisher:
ISBN:
Category : Demand for money
Languages : en
Pages : 14
Get Book Here
Book Description
This paper investigates the long-run demand for M1 in the postwar United States. Previous studies, based on data ending in the late 1980's, are inconclusive about the parameters of postwar money demand. This paper obtains precise estimates of these parameters by extending the data through 1996. The income elasticity of money demand is approximately 0.5, and the interest semi-elasticity is approximately -0.05. These parameters are significantly smaller in absolute value than the corresponding parameters for the prewar period
Author: Carlos Balseyro Rodriguez
Publisher:
ISBN:
Category :
Languages : es
Pages : 14
Get Book Here
Book Description
Author: Alfred A. Haug
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
We study annual U.S. data from 1869 or 1900 to 1999. We find evidence for a well-specified and stable model of money demand with data from 1946 to 1999. We carry out diagnostic and stability tests, including linearity tests. A linear error-correction model with the monetary base performs better than a model with M1. A specification with M2 is not supported. We use real gross national product as the scale variable and a short-term interest rate as the opportunity cost measure. We estimate an income elasticity of 0.86 and an interest rate elasticity of -0.44 for the monetary base.
Author: Palle Schelde Andersen
Publisher:
ISBN:
Category : Demand for money
Languages : en
Pages : 76
Get Book Here
Book Description
Author: Lars Jonung
Publisher: Routledge
ISBN: 1351523007
Category : Business & Economics
Languages : en
Pages : 181
Get Book Here
Book Description
The income velocity of money-an inverse measure of the demand for money balances-is the ratio of the money value of income to the average money stock that the public (excluding banks) holds in a given period. Why the magnitude of that ratio has changed over time is the subject of Michael D. Bordo and Lars Jonung's classic study, originally published as The Long-Run Behavior of the Velocity of Circulation. Supported by statistical data, econometric estimation techniques, and meticulous historical analysis, this work describes, in an international setting, how slow-moving economic, social, and political forces interact with the decisions households and firms make about how much money to hold. Annual time series of velocity for several countries from the late nineteenth century to the late twentieth century display a U-shaped pattern. Existing theories can explain each section of the velocity curve-the falling, flat, and rising parts-but the overall pattern is not consistent with any one theory. Here the authors put forth a comprehensive explanation for this behavior over time. Their theory is largely an extension of the approach of Knut Wicksell, the Swedish economist who stressed the role of substitution between monetary assets. This approach, which emphasizes institutional variables, is incorporated into the arguments for the traditional long-run money demand (velocity) function. Four types of empirical evidence strongly support the authors' theory: econometric studies of the long-run velocity function for several countries; a cross section study of approximately eighty countries in the postwar period; a case study of the Swedish monetization process in the fifty years before World War I; and an examination of the time series properties of velocity. Demand for Money suggests that institutional factors, as opposed to real income, play a greater role in velocity than previously thought. And these institutional factors have a major impact on monetary policy. This is a book that will prove of great value to economists, monetary strategists, and policymakers.
Author: Scott Hendry
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
The goal of this paper is to investigate and estimate long- run relationships among M1, prices, output and interest rates, with a view to determining if there is a stable relationship that can be interpreted as long-run money demand. The paper uses a maximum-likelihood multiple-equation cointegration technique, developed by Johansen, to fit a system of equations to the data. One finding is that long-run, but not short-run, unitary price elasticity is easily accepted, while the income elasticity is close to one-half. The coefficients on the deviation of money from its long-run equilibrium in the vector error-correction model imply that when M1 is above its long-run demand, money will decrease and prices increase to restore long-run equilibrium. The effects of the deviation on output and interest rates are insignificant, pointing to the weak exogeneity of these variables. The implication of the results is that all the adjustment to return the economy to monetary equilibrium comes from fluctuations in money and prices. However, this does not preclude the possibility that changes in the stock of money may have short-run real effects. Indeed, the results suggest that changes in M1 lead short-term changes in output.
Author: Dennis L. Hoffman
Publisher:
ISBN:
Category : Demand for money
Languages : en
Pages : 46
Get Book Here
Book Description
Author: Mr.Jaromir Benes
Publisher: International Monetary Fund
ISBN: 1475505523
Category : Business & Economics
Languages : en
Pages : 71
Get Book Here
Book Description
At the height of the Great Depression a number of leading U.S. economists advanced a proposal for monetary reform that became known as the Chicago Plan. It envisaged the separation of the monetary and credit functions of the banking system, by requiring 100% reserve backing for deposits. Irving Fisher (1936) claimed the following advantages for this plan: (1) Much better control of a major source of business cycle fluctuations, sudden increases and contractions of bank credit and of the supply of bank-created money. (2) Complete elimination of bank runs. (3) Dramatic reduction of the (net) public debt. (4) Dramatic reduction of private debt, as money creation no longer requires simultaneous debt creation. We study these claims by embedding a comprehensive and carefully calibrated model of the banking system in a DSGE model of the U.S. economy. We find support for all four of Fisher's claims. Furthermore, output gains approach 10 percent, and steady state inflation can drop to zero without posing problems for the conduct of monetary policy.
Author: James M. Boughton
Publisher:
ISBN:
Category :
Languages : en
Pages : 34
Get Book Here
Book Description
The reputation of the aggregate demand function for money balances has plummeted since the mid-1970s, owing to the destabilizing effects of financial innovation and deregulation. There is, nonetheless, a renewed effort among economists to uncover stable relationships, a revival that reflects in part the development of new econometric approaches, especially those related to cointegration and error correction models. This paper examines the long-run properties of money demand functions in the large industrial countries, under the hypothesis that the long-run functions have been stable but that the dynamic adjustment processes are more complex than those represented in most earlier models. The results do broadly support this hypothesis, but for certain aggregates they also call into question some basic hypotheses about the nature of the demand function, including notably that of homogeneity with respect to the price level.
Author: Luca Benati
Publisher:
ISBN:
Category :
Languages : en
Pages :
Get Book Here
Book Description
We explore the long-run demand for M1 based on a dataset comprising 38 countries and relatively long sample periods, extending in some cases to over a century. The evidence supports the existence of a stable long-run relationship between the ratio of M1 to GDP and a short-term interest rate for a large majority of the countries. The log-log specification provides a good characterization of the data, with the exception of periods featuring very low interest rates. An extension of the theory that imposes limits on the amount households can borrow results in a truncated log-log specification, which is in line with what we observe in the data. We estimate the interest rate elasticity to be between 0.3 and 0.6.
