A Money Demand Function with Output Uncertainty, Monetary Uncertainty, and Financial Innovations

Woon Gyu Choi and Seonghwan Oh

Journal of Money, Credit and Banking, 2003, vol. 35, issue 5, 685-709

Abstract: In a general equilibrium framework incorporating the money-in-the-utility function approach, we show that output uncertainty and monetary uncertainty as well as output, interest rates, and financial innovations affect money demand. The estimated long-run relationships are consistent with our postulated relation but not with the conventional one. Our model delivers a high income elasticity consistent with cross-sectional evidence and helps resolve MI demand puzzles. The model estimated in dynamic error correction form exhibits a good level of stability and forecastability, providing little support for the recent de-emphasis of monetary aggregates due to the instability of money demand.

Date: 2003
References: Add references at CitEc
Citations: View citations in EconPapers (74)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
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:mcb:jmoncb:v:35:y:2003:i:5:p:685-709

Access Statistics for this article

Journal of Money, Credit and Banking is currently edited by Robert deYoung, Paul Evans, Pok-Sang Lam and Kenneth D. West

More articles in Journal of Money, Credit and Banking from Blackwell Publishing
Bibliographic data for series maintained by Wiley-Blackwell Digital Licensing () and Christopher F. Baum ().