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Production, Financial Sophistication, and the Demand for Money by Households and Firms

Author

Listed:
  • Hiroshi Fujiki

    (Research Division 1, Institute for Monetary and Economic Studies, Bank of Japan)

  • Casey B. Mulligan

    (Department of Economics, University of Chicago)

Abstract

A framework for modeling the demand for money by households and firms is proposed. It allows for both endogenous and exogenous changes in the degree of financial sophistication as well as for multiple monetary assets.The framework is especially useful for interpreting and comparing the many empirical estimates of money demand,as it lists relationships among a variety of empirical and theoretical specifications.We consider a parametric version of the model,and show how the parameters are related to the behavior of various aggregate variables including the aggregate demand for money by firms,the aggregate demand by households,and the aggregate national demand.

Suggested Citation

  • Hiroshi Fujiki & Casey B. Mulligan, 1996. "Production, Financial Sophistication, and the Demand for Money by Households and Firms," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 14(1), pages 65-103, July.
  • Handle: RePEc:ime:imemes:v:14:y:1996:i:1:p:65-103
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    Citations

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    Cited by:

    1. Giuseppe Ferrero & Andrea Nobili & Patrizia Passiglia, 2007. "The sectoral distribution of money supply in the Euro area," Temi di discussione (Economic working papers) 627, Bank of Italy, Economic Research and International Relations Area.
    2. Giuseppe Ferrero & Andrea Nobili & Patrizia Passiglia, 2011. "Assessing excess liquidity in the euro area: the role of sectoral distribution of money," Applied Economics, Taylor & Francis Journals, vol. 43(23), pages 3213-3230.
    3. Casey B. Mulligan, "undated". "The Demand for Money by Firms: Some Additional Empirical Results," University of Chicago - Population Research Center 97-1, Chicago - Population Research Center.
    4. Bover, Olympia & Watson, Nadine, 2005. "Are there economies of scale in the demand for money by firms? Some panel data estimates," Journal of Monetary Economics, Elsevier, vol. 52(8), pages 1569-1589, November.
    5. Piero Ganugi & Luigi Grossi & Giancarlo Ianulardo, 2015. "Scale Economies And Heterogeneity In Business Money Demand: The Italian Experience," Bulletin of Economic Research, Wiley Blackwell, vol. 67(2), pages 146-165, April.
    6. Lotti, Francesca & Marcucci, Juri, 2007. "Revisiting the empirical evidence on firms' money demand," Journal of Economics and Business, Elsevier, vol. 59(1), pages 51-73.
    7. Hiroshi Fujiki & Cheng Hsiao, 2008. "Aggregate and Household Demand for Money: Evidence from Public Opinion Survey on Household Financial Assets and Liabilities," IMES Discussion Paper Series 08-E-17, Institute for Monetary and Economic Studies, Bank of Japan.

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