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Policy Uncertainty and the Demand for Money in Japan

Author

Listed:
  • Mohsen Bahmani-Oskooee

    (University of Wisconsin-Milwaukee)

  • Majid Maki Nayeri

    (University of Wisconsin-Milwaukee)

Abstract

"In an attempt to establish stability of the demand for money, some recent studies have included the volatility of the money supply and output to account for uncertainty. In this paper we consider the experience of Japan but rather than including an uncertainty measure related to money supply and output, we include a relatively more comprehensive measure known as Economic Policy Uncertainty. When we included this later measure, we were unable to find a stable money demand in Japan. However, when we introduced the nonlinear adjustment of policy uncertainty, we not only found a stable money demand but also meaningful estimates. Since the approach allows us to assess asymmetries, we found that in Japan the public hold more cash when there is an increase or a decrease in uncertainty. "

Suggested Citation

  • Mohsen Bahmani-Oskooee & Majid Maki Nayeri, 2020. "Policy Uncertainty and the Demand for Money in Japan," Review of Economic Analysis, Digital Initiatives at the University of Waterloo Library, vol. 12(1), pages 73-87, April.
    • Handle: RePEc:ren:journl:v:12:y:2020:i:1:p:73-87
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    File URL: https://openjournals.uwaterloo.ca/index.php/rofea/article/view/1692/2043
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    Citations

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    Cited by:

    1. Nusair, Salah A. & Al-Khasawneh, Jamal A., 2022. "Impact of economic policy uncertainty on the stock markets of the G7 Countries:A nonlinear ARDL approach," The Journal of Economic Asymmetries, Elsevier, vol. 26(C).
    2. Purvi Jhawar & Jayanta Kumar Seal, 2023. "Political Uncertainty and Initial Public Offerings: A Literature Review," IJFS, MDPI, vol. 11(2), pages 1-17, June.
    3. Chelghoum, Amirouche & Boumimez, Fayçal & Alsamara, Mouyad, 2023. "Asymmetric effects of oil price shocks on the demand for money in Algeria," The Quarterly Review of Economics and Finance, Elsevier, vol. 89(C), pages 1-11.

    More about this item

    Keywords

    Money Demand; Japan; Policy Uncertainty; Asymmetry; Nonlinear ARDL;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

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