The Demand for Money in a Simultaneous-Equation Framework
This paper estimates the demand for money in the U.S. within a model where the money supply function is also considered simultaneously. The explanatory variables for the money demand function include a measure of the interest rate, real income and the exchange rate. The explanatory variables for the money supply function include the output gap and the inflation gap in addition to an interest rate. The parameters estimated for the two equations avoid being biased or inconsistent. The results should be useful to both macroeconomic researchers and policy makers.
Volume (Year): 31 (2011)
Issue (Month): 2 ()
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9010, Erasmus University of Rotterdam - Institute for Economic Research.
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- Klein, Benjamin, 1977. "The Demand for Quality-adjusted Cash Balances: Price Uncertainty in the U.S. Demand for Money Function," Journal of Political Economy, University of Chicago Press, vol. 85(4), pages 691-715, August.
- Mohsen Bahmani-Oskooee & Hafez Rehman, 2005. "Stability of the money demand function in Asian developing countries," Applied Economics, Taylor & Francis Journals, vol. 37(7), pages 773-792.
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