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Seasonal Fluctuations and the Demand for Money

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  • Miquel Faig

Abstract

The reaction of money holders to the systematic seasonal changes in the level of transactions represents an interesting "experiment" for learning about the money demand function. An analysis of the seasonal fluctuations of the real quantity of money and several measures of transactions in the United States, Germany, the United Kingdom, and Canada reveals the following. First, Consumption Expenditures in Semidurables, Nondurables, and Services appears to be a good proxy for transactions in a money demand function, and superior to Gross Domestic Product or Consumption Expenditures. Second, the transactions elasticity of the demand for money is substantially lower than one.

Suggested Citation

  • Miquel Faig, 1989. "Seasonal Fluctuations and the Demand for Money," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 104(4), pages 847-861.
    • Handle: RePEc:oup:qjecon:v:104:y:1989:i:4:p:847-861.
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    Cited by:

    1. Kollmann, Robert, 2001. "The exchange rate in a dynamic-optimizing business cycle model with nominal rigidities: a quantitative investigation," Journal of International Economics, Elsevier, vol. 55(2), pages 243-262, December.
    2. Faig Miquel & Jerez Belén, 2006. "Inflation, Prices, and Information in Competitive Search," The B.E. Journal of Macroeconomics, De Gruyter, vol. 6(1), pages 1-34, September.
    3. Albuquerque, Pedro H. & Gouvea, Solange, 2009. "Canaries and vultures: A quantitative history of monetary mismanagement in Brazil," Journal of International Money and Finance, Elsevier, vol. 28(3), pages 479-495, April.
    4. Christopher Bajada, 2002. "Estimating The Uses Of Currency In Australia," Economic Papers, The Economic Society of Australia, vol. 21(3), pages 14-30, September.
    5. Bohl, Martin T., 2000. "Nonstationary stochastic seasonality and the German M2 money demand function," European Economic Review, Elsevier, vol. 44(1), pages 61-70, January.
    6. Mankiw, N. Gregory & Miron, Jeffrey A., 1991. "Should the fed smooth interest rates? the case of seasonal monetary policy," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 34(1), pages 41-69, January.
    7. Jeffrey A. Miron, 1996. "The Economics of Seasonal Cycles," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262133237, December.
    8. Samuel Andoh & David Chappell, 2002. "Stability of the money demand function: evidence from Ghana," Applied Economics Letters, Taylor & Francis Journals, vol. 9(13), pages 875-878.
    9. James Boughton, 1992. "International comparisons of money demand," Open Economies Review, Springer, vol. 3(3), pages 323-343, October.

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