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An empirical examination of the inventory-theoretic model of precautionary money demand

Jan Tin ()

Economics Letters, 2008, vol. 99, issue 1, 204-205

Abstract: This study examines the empirical contents of precautionary demand for transactions money balances. Panel data are utilized to construct estimates of income variance. Regression results indicate that income uncertainty has a positive effect on precautionary money demand, but the magnitude of the elasticity of income variance falls far short of those suggested by economic theories.

Date: 2008
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Handle: RePEc:eee:ecolet:v:99:y:2008:i:1:p:204-205