On the Stability of Money Demand

Robert Lucas and Juan Pablo Nicolini

No 718, Working Papers from Federal Reserve Bank of Minneapolis

Abstract: We show that regulatory changes that occurred in the banking sector in the early eighties, which considerably weakened Regulation Q, can explain the apparent instability of money demand during the same period. We evaluate the effects of the regulatory changes using a model that goes beyond aggregates as M1 and treats currency and different deposit types as alternative means of payments. We use the model to construct a new monetary aggregate that performs remarkably well for the entire period 1915-2012.

Keywords: Money demand; Monetary base (search for similar items in EconPapers)
JEL-codes: E40 E41 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2015-02-02
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (96)

Downloads: (external link)
https://www.minneapolisfed.org/research/wp/wp718.pdf Full text (application/pdf)

Related works:
Journal Article: On the stability of money demand (2015)
Working Paper: On the stability of money demand (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmwp:718

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of Minneapolis Contact information at EDIRC.
Bibliographic data for series maintained by Kate Hansel ().