The Demand For Money: A Structural Econometric Investigation
AbstractThis study empirically investigates dynamic microfoundations for the conventional static money demand equation. An intertemporal substitution model with the addilog utility function yields a money demand relationship that closely approximates the double log specification. Results from previous empirical studies largely support the derived equation. Estimations with quarterly U.S. data support cointegration among real per capita M1 and consumption, and an after-tax long-term interest rate for the post-1980 period. Estimated short-run intertemporal interest rate elasticities of consumption vary from ?0.26 to ?0.93. Estimated long-run elasticities of substitution between consumption and money range from ?0.26 to ?0.41.
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Bibliographic InfoArticle provided by Southern Economic Association in its journal Southern Economic Journal.
Volume (Year): 68 (2001)
Issue (Month): 1 (July)
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