Advanced Search
MyIDEAS: Login to save this article or follow this journal

An investigation of cash management practices and their effects on the demand for money

Contents:

Author Info

  • Michael Dotsey
Registered author(s):

    Abstract

    The observed shift in statistical demand-for-money relationships during the mid-1970s was once thought to reflect an unexplainable change in behavior. More recently, economists have recognized that the conventional regressions inadequately represented the demand for money. Specifically, the standard models overpredicted money demand during the 1970s since they failed to capture the effects of sophisticated cash management techniques. In “An Investigation of Cash Management Practices and Their Effects on the Demand for Money,” Michael Dotsey examines ways of augmenting the conventional models to overcome this problem. By looking at the causes of changes in cash management practices, Dotsey finds four variables related to cash management, which he tests for ability to explain the mid-1970s shift in a standard regression explaining the demand for money. Each of the proxies reduces the instability of the equation. Indeed, one such proxy, the number of electronic funds transfers over the Federal Reserve’s wire system, captures the entire shift in the conventional model in the 1970s.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.richmondfed.org/publications/research/economic_review/1984/pdf/er700501.pdf
    Download Restriction: no

    Bibliographic Info

    Article provided by Federal Reserve Bank of Richmond in its journal Economic Review.

    Volume (Year): (1984)
    Issue (Month): Sep ()
    Pages: 3-12

    as in new window
    Handle: RePEc:fip:fedrer:y:1984:i:sep:p:3-12:n:v.70no.5

    Contact details of provider:
    Web page: http://www.richmondfed.org/
    More information through EDIRC

    Order Information:
    Email:
    Web: http://www.richmondfed.org/publications/

    Related research

    Keywords: Money;

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Richard D. Porter & Thomes D. Simpson & Eileen Mauskopf, 1979. "Financial Innovation and the Monetary Aggregates," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 10(1), pages 213-230.
    2. Lieberman, Charles, 1977. "The Transactions Demand for Money and Technological Change," The Review of Economics and Statistics, MIT Press, vol. 59(3), pages 307-17, August.
    3. Carlson, John A & Frew, James R, 1980. "Money Demand Responsiveness to the Rate of Return on Money: A Methodological Critique," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 88(3), pages 598-607, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Harold L. Cole & Lee E. Ohanian, 1997. "Shrinking money and monetary business cycles," Working Papers, Federal Reserve Bank of Minneapolis 579, Federal Reserve Bank of Minneapolis.
    2. Sturzenegger, Federico, 1997. "Understanding the welfare implications of currency substitution," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 21(2-3), pages 391-416.
    3. Ireland, Peter N, 1995. "Endogenous Financial Innovation and the Demand for Money," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 27(1), pages 107-23, February.
    4. Martin Uribe, 1995. "Hysteresis in a simple model of currency substitution," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 509, Board of Governors of the Federal Reserve System (U.S.).
    5. Visser, H., 1989. "The demand for money," Serie Research Memoranda, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics 0073, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    6. Cole, Harold L. & Ohanian, Lee E., 2002. "Shrinking money: the demand for money and the nonneutrality of money," Journal of Monetary Economics, Elsevier, Elsevier, vol. 49(4), pages 653-686, May.
    7. Harold L. Cole & Lee E. Ohanian, 1998. "The demand for money and the nonneutrality of money," Staff Report, Federal Reserve Bank of Minneapolis 246, Federal Reserve Bank of Minneapolis.
    8. Duca, John V. & VanHoose, David D., 2004. "Recent developments in understanding the demand for money," Journal of Economics and Business, Elsevier, Elsevier, vol. 56(4), pages 247-272.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:fip:fedrer:y:1984:i:sep:p:3-12:n:v.70no.5. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (William Perkins).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.