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Which Road Leads to Stable Money Demand?

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Author Info
William A. Barnett (Washington University in St. Louis)

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Abstract

This paper denies that the demand for money function is any more unstable than other demand functions and maintains that the controversies regarding unstable money demand are produce by poor methodology that is not shared by other areas of the field of economics, when investigating demand function properties.

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Publisher Info
Paper provided by EconWPA in its series Macroeconomics with number 9611001.

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Length: 19 pages
Date of creation: 04 Nov 1996
Date of revision:
Handle: RePEc:wpa:wuwpma:9611001

Note: Type of Document - Microsoft Word; prepared on Macintosh; to print on PostScript; pages: 19 ; figures: 1 included.. This paper is the most recent draft of a paper invited by the Economic Journal for its Controversies Section. The topic of the section will be stability of the demand for money function. See http://econwpa.wustl.edu:80/~barnett/ .
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Related research
Keywords: Divisia velocity demand money stability;

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Find related papers by JEL classification:
E - Macroeconomics and Monetary Economics

References listed on IDEAS
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.:

  1. William Barnett, 2005. "Monetary Aggregation," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 200510, University of Kansas, Department of Economics, revised Mar 2005. [Downloadable!]
    Other versions:
  2. Swofford, James L, 1995. "A Revealed Preference Analysis of Friedman and Schwartz Money," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(1), pages 154-64, February. [Downloadable!] (restricted)
  3. Barnett, William A & Hahm, Jeong Ho, 1994. "Financial-Firm Production of Monetary Services: A Generalized Symmetric Barnett Variable-Profit-Function Approach," Journal of Business & Economic Statistics, American Statistical Association, vol. 12(1), pages 33-46, January.
  4. Barnett, William A., 1980. "Economic monetary aggregates an application of index number and aggregation theory," Journal of Econometrics, Elsevier, vol. 14(1), pages 11-48, September. [Downloadable!] (restricted)
  5. Rotemberg, Julio J & Driscoll, John C & Poterba, James M, 1995. "Money, Output, and Prices: Evidence from a New Monetary Aggregate," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(1), pages 67-83, January.
    Other versions:
  6. James M. Poterba & Julio J. Rotemberg, 1988. "Money in the Utility Function: An Empirical Implementation," NBER Working Papers 1796, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. William A. Barnett & Yi Liu, 1996. "The CAPM-Extended Divisia Monetary Aggregate with Exact Tracking under Risk," Finance 9602001, EconWPA. [Downloadable!]
  8. Barnett, William A, 1983. "New Indices of Money Supply and the Flexible Laurent Demand System," Journal of Business & Economic Statistics, American Statistical Association, vol. 1(1), pages 7-23, January.
  9. Douglas Fisher & Adrian Fleissig, 1994. "Money demand in a flexible dynamic Fourier expenditure system," Proceedings, Federal Reserve Bank of St. Louis, issue Mar, pages 117-128. [Downloadable!]
  10. Laidler, D., 1996. "Notes on the Microfoundations of Monetary Economics," UWO Department of Economics Working Papers 9610, University of Western Ontario, Department of Economics.
    Other versions:
  11. Swofford, James L & Whitney, Gerald A, 1987. "Nonparametric Tests of Utility Maximization and Weak Separability for Consumption, Leisure and Money," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 458-64, August. [Downloadable!] (restricted)
  12. Barnett, William A., 1978. "The user cost of money," Economics Letters, Elsevier, vol. 1(2), pages 145-149. [Downloadable!] (restricted)
  13. William A. Barnett & Melvin Hinich & Piyu Yue, 1989. "Monitoring monetary aggregates under risk aversion," Proceedings, Federal Reserve Bank of St. Louis, pages 189-245.
  14. Berndt, Ernst R & Darrough, Masako N & Diewert, W E, 1977. "Flexible Functional Forms and Expenditure Distributions: An Application to Canadian Consumer Demand Functions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(3), pages 651-75, October. [Downloadable!] (restricted)
  15. Richard G. Anderson & Barry Jones & Travis Nesmith, 1996. "Building new monetary services indices: methodology and source data," Working Papers 1996-008, Federal Reserve Bank of St. Louis. [Downloadable!]
  16. Moulin, Herve, 1994. "Social choice," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 2, chapter 31, pages 1091-1125 Elsevier. [Downloadable!] (restricted)
  17. Serletis, Apostolos, 1991. "The Demand for Divisia Money in the United States: A Dynamic Flexible Demand System," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 23(1), pages 35-52, February. [Downloadable!] (restricted)
  18. Richard G. Anderson & Robert H. Rasche, 1996. "A revised measure of the St. Louis adjusted monetary base," Working Papers 1996-004, Federal Reserve Bank of St. Louis. [Downloadable!]
    Other versions:
  19. Richard G. Anderson & Robert H. Rasche, 2000. "The domestic adjusted monetary base," Working Papers 2000-002, Federal Reserve Bank of St. Louis. [Downloadable!]
  20. William Whitesell & Sean Collins, 1996. "A minor redefinition of M2," Finance and Economics Discussion Series 96-7, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  21. Richard G. Anderson & Kenneth A. Kavajecz, 1994. "A historical perspective on the Federal Reserve's monetary aggregates: definition, construction and targeting," Proceedings, Federal Reserve Bank of St. Louis, issue Mar, pages 1-31. [Downloadable!]
  22. K. Alec Chrystal & Ronald MacDonald, 1994. "Empirical evidence on the recent behavior and usefulness of simple-sum and weighted measures of the money stock," Proceedings, Federal Reserve Bank of St. Louis, issue Mar, pages 73-109. [Downloadable!]
  23. Belongia, Michael T, 1996. "Measurement Matters: Recent Results from Monetary Economics Reexamined," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 1065-83, October. [Downloadable!] (restricted)
  24. Feldstein, Martin & Stock, James H., 1996. "Measuring money growth when financial markets are changing," Journal of Monetary Economics, Elsevier, vol. 37(1), pages 3-27, February. [Downloadable!] (restricted)
    Other versions:
  25. Hansen, Lars Peter & Heckman, James J, 1996. "The Empirical Foundations of Calibration," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 87-104, Winter. [Downloadable!] (restricted)
  26. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May. [Downloadable!] (restricted)
  27. W. Erwin Diewert, 1980. "Aggregation Problems in the Measurement of Capital," NBER Chapters, in: The Measurement of Capital, pages 433-538 National Bureau of Economic Research, Inc. [Downloadable!]
  28. Barnett, William A & Offenbacher, Edward K & Spindt, Paul A, 1984. "The New Divisia Monetary Aggregates," Journal of Political Economy, University of Chicago Press, vol. 92(6), pages 1049-85, December. [Downloadable!] (restricted)
  29. Diewert, W Erwin, 1978. "Superlative Index Numbers and Consistency in Aggregation," Econometrica, Econometric Society, vol. 46(4), pages 883-900, July. [Downloadable!] (restricted)
  30. Roper, Don E & Turnovsky, Stephen J, 1980. "The Optimum Monetary Aggregate for Stabilization Policy," The Quarterly Journal of Economics, MIT Press, vol. 95(2), pages 333-55, September. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, 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.)

  1. Livio Stracca, 2001. "Does liquidity matter? Properties of the synthetic divisia monetary aggregate in the Euro area," Working Paper Series 079, European Central Bank. [Downloadable!]
  2. William A. Barnett & Barry E. Jones & Milka Kirova & Travis Nesmith & Meenakshi Pasupathy, 2004. "The Nonlinear Skeletons in the Closet," Econometrics 0405003, EconWPA. [Downloadable!]
    Other versions:
  3. William Barnett & Marcelle Chauvet, 2008. "International Financial Aggregation and Index Number Theory: A Chronological Half-Century Empirical Overview," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 200804, University of Kansas, Department of Economics, revised Sep 2008. [Downloadable!]
    Other versions:
  4. Leigh Drake & Adrian Fleissig, 2004. "Admissible Monetary Aggregates and UK Inflation Targeting," Money Macro and Finance (MMF) Research Group Conference 2004 2, Money Macro and Finance Research Group. [Downloadable!]
  5. Taufiq Choudhry, 2002. "Financial Innovations And Demand For United States M1 And M2 Components," International Economic Journal, Korean International Economic Association, vol. 16(1), pages 73-93, April. [Downloadable!] (restricted)
  6. Wesche, Katrin, 1996. "Aggregating Money Demand in Europe with a Divisia Index," Discussion Paper Serie B 392, University of Bonn, Germany. [Downloadable!]
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