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Total Transaction Measures And M1 Growth

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  • PETER E. KRETZMER
  • RICHARD D. PORTER

Abstract

This paper examines the role of measures of total transactions in explaining growth in the demand for Ml money balances. Fueled by strong growth in financial activities, total transactions have grown rapidly relative to nominal GNP, especially since 1979. In an aggregate Ml equation, we find financial transaction measures to be of some additional help in explaining Ml growth, beyond the ability of GNP to do so alone. A disaggregated approach shows more promise, with transaction measures improving the explanation of demand deposit growth.

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  • Peter E. Kretzmer & Richard D. Porter, 1987. "Total Transaction Measures And M1 Growth," Contemporary Economic Policy, Western Economic Association International, vol. 5(1), pages 64-75, January.
    • Handle: RePEc:bla:coecpo:v:5:y:1987:i:1:p:64-75
    DOI: 10.1111/j.1465-7287.1987.tb00245.x
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    References listed on IDEAS

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    1. Spindt, Paul A, 1985. "Money Is What Money Does: Monetary Aggregation and the Equation of Exchange," Journal of Political Economy, University of Chicago Press, vol. 93(1), pages 175-204, February.
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    1. Robert L. Hetzel, 1987. "Will Recent High Growth Rates Of Money Revive Inflation?," Contemporary Economic Policy, Western Economic Association International, vol. 5(1), pages 41-53, January.
    2. Smith, Marlene A & Smyth, David J, 1991. "Multiple and Pairwise Non-nested Tests of the Influence of Taxes on Money Demand," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 6(1), pages 17-30, Jan.-Marc.

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