On the stability of money demand

Robert Lucas and Juan Pablo Nicolini

Journal of Monetary Economics, 2015, vol. 73, issue C, 48-65

Abstract: We show that regulatory changes that occurred in the banking sector in the early 1980s, that considerably weakened Regulation Q, can explain the apparent instability of money demand starting in 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 all the period 1915–2012.

Keywords: Money Demand; Monetary Base (search for similar items in EconPapers)
JEL-codes: E40 E41 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (119)

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Related works:
Working Paper: On the Stability of Money Demand (2015)
Working Paper: On the stability of money demand (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:73:y:2015:i:c:p:48-65

DOI: 10.1016/j.jmoneco.2015.03.005

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