Homogeneity and the Transactions Demand for Money
The paper presents the properties of money demand implied by the Frenkel-Jovanovic (1980) inventory model. Without approximation, the money demand function is implicitly defined by the first-order condition of the model. From the implicit function, we show that the elasticities of money demand satisfy a set of homogeneity conditions. We also show that increasing transactions cost increases the cash flow elasticity, the interest elasticity (in absolute value) and the uncertainty elasticity, but decreases the transactions cost elasticity. If the ratio of cash-flow uncertainty to the transactions variable is small, then the interest elasticity is greater than 1/2. In contrast, it lies between $71 and 1/2 when the approximation method is applied.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Volume (Year): 31 (1999)
Issue (Month): 4 (November)
|Contact details of provider:|| Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879 |
When requesting a correction, please mention this item's handle: RePEc:mcb:jmoncb:v:31:y:1999:i:4:p:720-30. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.