The Demand for Money in a Simultaneous-Equation Framework

A. M. M. Jamal () and Yu Hsing
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A. M. M. Jamal: Southeastern Louisiana University
Yu Hsing: Southeastern Louisiana University

Economics Bulletin, 2011, vol. 31, issue 2, 1929-1934

Abstract: This paper estimates the demand for money in the U.S. within a model where the money supply function is also considered simultaneously. The explanatory variables for the money demand function include a measure of the interest rate, real income and the exchange rate. The explanatory variables for the money supply function include the output gap and the inflation gap in addition to an interest rate. The parameters estimated for the two equations avoid being biased or inconsistent. The results should be useful to both macroeconomic researchers and policy makers.

Keywords: Money demand; money supply; simultaneous-equation model; output gap; inflation gap; three stage least squares (search for similar items in EconPapers)
JEL-codes: E4 E5 (search for similar items in EconPapers)
Date: 2011-06-30
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Citations: View citations in EconPapers (1)

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