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The Income Elasticity of Money Demand: A Meta-Analysis of Empirical Results *

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Markus Knell
Helmut Stix

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Abstract

In this paper, we use meta-analytic methods to investigate possible sources for the large variation in empirical findings about the income elasticity of money demand. Our results suggest that the broadness of the monetary aggregate, the inclusion of wealth and the consideration of financial innovation exert a significant influence on estimated income elasticities. Furthermore, we find substantial cross-country differences, in particular between the US and other countries. These differences can, to some extent, be explained by the macrofeconomic environment and the dissemination of payment cards. Copyright Blackwell Publishers Ltd, 2005.

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Article provided by Blackwell Publishing in its journal Journal of Economic Surveys.

Volume (Year): 19 (2005)
Issue (Month): 3 (07)
Pages: 513-533
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Handle: RePEc:bla:jecsur:v:19:y:2005:i:3:p:513-533

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