Endogenous financial innovation and the demand for money
AbstractThis paper embeds two key ideas about the nature of financial innovation taken from the empirical literature into a familiar equilibrium monetary model. It provides formal support for several alternative econometric specifications for money demand that attempt to capture the effects of financial innovation and demonstrates that a popular theoretical model of money demand, when suitably modified, can account for some unusual monetary dynamics found in the data. Thus, it helps to establish both the theoretical relevance of recent empirical work and the empirical relevance of recent theoretical work on the demand of money.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Richmond in its series Working Paper with number 92-03.
Date of creation: 1992
Date of revision:
Other versions of this item:
- Ireland, Peter N, 1995. "Endogenous Financial Innovation and the Demand for Money," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(1), pages 107-23, February.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jared Enzler & Lewis Johnson & John Paulus, 1976. "Some Problems of Money Demand," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(1), pages 261-282.
- Stephen M. Goldfeld, 1973. "The Demand for Money Revisited," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 4(3), pages 577-646.
- John V. Duca, 1992.
"The case of the missing M2,"
Economic and Financial Policy Review,
Federal Reserve Bank of Dallas, issue Q II, pages 1-24.
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- Michael Dotsey, 1984. "An investigation of cash management practices and their effects on the demand for money," Economic Review, Federal Reserve Bank of Richmond, issue Sep, pages 3-12.
- Goldfeld, Stephen M. & Sichel, Daniel E., 1990. "The demand for money," Handbook of Monetary Economics, in: B. M. Friedman & F. H. Hahn (ed.), Handbook of Monetary Economics, edition 1, volume 1, chapter 8, pages 299-356 Elsevier.
- Donald D. Hester, 1981. "Innovations and Monetary Control," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 12(1), pages 141-200.
- Lieberman, Charles, 1977. "The Transactions Demand for Money and Technological Change," The Review of Economics and Statistics, MIT Press, vol. 59(3), pages 307-17, August.
- Lawrence J. Christiano, 1991. "Modeling the liquidity effect of a money shock," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 3-34.
- Phillip Cagan & Anna J. Schwartz, 1987.
"Has the Growth of Money Substitutes Hindered Monetary Policy?,"
in: Money in Historical Perspective, pages 209-233
National Bureau of Economic Research, Inc.
- Cagan, Phillip & Schwartz, Anna Jacobson, 1975. "Has the Growth of Money Substitutes Hindered Monetary Policy?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 7(2), pages 137-59, May.
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