Comment: The Demand for Liquid Asset Balances by U.S. Manufacturing Corporations: 1959–1970

Cherukuri U. Rao

Journal of Financial and Quantitative Analysis, 1973, vol. 8, issue 2, 223-225

Abstract: The paper presented by Professors Marcis and Smith (M-S), analyzing the determinants of the demand for cash and short-term Treasury obligations held by U. S. manufacturing corporations, is praiseworthy. The authors have made an interesting application of a seemingly unrelated regression (SUR) technique developed by Arnold Zellner [3] in estimating demand functions jointly for each of the liquid assets of corporations belonging to nine asset size categories. Nonetheless, I have some reservations about the implications of the model employed in their present study and the reliability of their results. Some of my reservations concern the theoretical foundation of their model itself, while others are related to their methodology and estimation techniques.

Date: 1973
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