IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Testing the Portfolio Theory of Money Demand in the United States

Listed author(s):
  • Hsing , Yu


    (Department of General Business, Southeastern Louisiana University)

  • Chang, Hui S.


    (University of Tennessee Department of Economics, College of Business Administration)

Registered author(s):

The portfolio model of asset allocations is used to estimate the demand function for real M2 in the United States. The explanatory variables include real return on real M2, real returns on stocks and bonds, wealth, and the expected inflation rate. The cointegration test shows that the demand for real M2 and the explanatory variables have a long-term stable relationship. According to results of testing for proper functional forms, we can reject the logarithmic form but cannot reject the linear form. The empirical results also show that the demand for real M2 is positively associated with the own interest rate and wealth, and is negatively affected by the return on stocks, the return on long bonds, and the expected inflation rate. However, the elasticity of real M2 demand with respect to the return on stocks is quite small. Wealth has the largest elasticity. The return on bonds and the expected inflation rate are important macroeconomic variables for the government to monitor due to their relatively sensitive relationship with the demand for real M2.

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
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.

Article provided by Camera di Commercio Industria Artigianato Agricoltura di Genova in its journal Economia Internazionale / International Economics.

Volume (Year): 56 (2003)
Issue (Month): 1 ()
Pages: 13-21

in new window

Handle: RePEc:ris:ecoint:0167
Contact details of provider: Postal:
Via Garibaldi 4, 16124 Genova, Italy

Phone: +39 010 27041
Fax: +39 010 2704222
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ris:ecoint:0167. 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: (Angela Procopio)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.