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The Determinants of the Money Multiplier in the United Kingdom

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  • Beenstock, Michael

Abstract

An econometric model for the U.K. money (LM3) multiplier is estimated from annual data on the postwar period. The model consists of three behavioral equations: (1) the currency ratio in which the demand for currency varies inversely with interest rates on demand deposits; (2) a time deposit ratio in which the demand for time deposits varies inversely with the differential rates of interest and; (3) a bank reserve ratio in which the demand for reserves varies inversely with interest rates. The model is used to calculate dynamic multipliers and counterfactual simulations for financial innovations of the 1970s. Copyright 1989 by Ohio State University Press.

Suggested Citation

  • Beenstock, Michael, 1989. "The Determinants of the Money Multiplier in the United Kingdom," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 21(4), pages 464-480, November.
    • Handle: RePEc:mcb:jmoncb:v:21:y:1989:i:4:p:464-80
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    Cited by:

    1. Mr. Robert Tchaidze & Mr. Salome Tvalodze, 2011. "Deposit Formation in Georgia," IMF Working Papers 2011/078, International Monetary Fund.
    2. George M. Georgiou & George Syrichas, 1994. "The Underground Economy: An Overview and Estimates for Cyprus," Working Papers 1994, Central Bank of Cyprus.
    3. Tatiana Damjanovic & Sarunas Girdenas, 2013. "Should Central Bank respond to the Changes in the Loan to Collateral Value Ratio and in the House Prices?," Discussion Papers 1303, University of Exeter, Department of Economics.
    4. Perry Warjiyo, 1990. "A Multiplier Model of Money Stock Control for Indonesia," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 38, pages 359-383, Desember.
    5. Damjanovic, Tatiana & Girdėnas, Šarūnas, 2014. "Quantitative easing and the loan to collateral value ratio," Journal of Economic Dynamics and Control, Elsevier, vol. 45(C), pages 146-164.
    6. Gabriel Di Bella & Mr. David Hauner, 2005. "How Useful is Monetary Econometrics in Low-Income Countries? T+L3104he Case of Money Demand and the Multipliers in Rwanda," IMF Working Papers 2005/178, International Monetary Fund.

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