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The impact of commercial sweeping on the demand for monetary assets during the Great Recession

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  • Fleissig, Adrian R.
  • Jones, Barry E.

Abstract

This study investigates how accounting for commercial sweeping affects estimates of elasticities of substitution between monetary assets over the period 1991 to 2012 using a Fourier flexible form. On the basis of the Fourier model, we find that adjusting the monetary data for commercial sweeps leads to higher average estimates for many elasticities of substitution over the sample period. The average value of an elasticity capturing substitution between currency and demand deposits and other checkable deposits nearly doubled when the elasticity was estimated using data that was adjusted for commercial sweeps as compared with unadjusted data. We also find that the share of commercial sweeps relative to total demand deposits eventually ended up lower following each of the past two recessions than it was leading up to them.

Suggested Citation

  • Fleissig, Adrian R. & Jones, Barry E., 2015. "The impact of commercial sweeping on the demand for monetary assets during the Great Recession," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 412-422.
    • Handle: RePEc:eee:jmacro:v:45:y:2015:i:c:p:412-422
    DOI: 10.1016/j.jmacro.2015.06.003
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    More about this item

    Keywords

    Retail sweeping; Commercial sweeping; Monetary asset substitution; Monetary policy;
    All these keywords.

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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