Financial Innovations and the Interest Elasticity of Money Demand in the United Kingdom, 1963¡V2009
AbstractThis paper empirically examines the relationship between financial innovations and interest elasticity of money demand in the UK. Contrary to most research work in this area, the results indicate that financial innovations and other deregulatory changes in financial market conditions after the 1980s have raised the interest elasticity of money demand, and this appears to support the Gurley-Shaw hypothesis. The evidence calls into question the relative efficacy of a monetary targeting approach in the conduct of monetary policy.
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Bibliographic InfoArticle provided by College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan in its journal International Journal of Business and Economics.
Volume (Year): 8 (2009)
Issue (Month): 3 (December)
interest elasticity; money demand; financial innovations; Gurley-Shaw hypothesis; rolling regressions;
Find related papers by JEL classification:
- C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
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