A Money Demand Function with Output Uncertainty, Monetary Uncertainty, and Financial Innovations
In a general equilibrium framework incorporating the money-in-the-utility function approach, we show that output uncertainty and monetary uncertainty as well as output, interest rates, and financial innovations affect money demand. The estimated long-run relationships are consistent with our postulated relation but not with the conventional one. Our model delivers a high income elasticity consistent with cross-sectional evidence and helps resolve MI demand puzzles. The model estimated in dynamic error correction form exhibits a good level of stability and forecastability, providing little support for the recent de-emphasis of monetary aggregates due to the instability of money demand.
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): 35 (2003)
Issue (Month): 5 (October)
|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:35:y:2003:i:5:p:685-709. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.