U.S. Narrow Money for the Twenty-First Century
Donald Dutkowsky (),
Barry Cynamon and
Barry Jones ()
Economic Inquiry, 2006, vol. 44, issue 1, 142-152
This study focuses on sweep programs in establishing conceptually appropriate and reliable measures of narrow money. We propose the aggregates M1RS = M1 + holdings of funds swept in retail sweep programs, and M1S = M1RS + holdings of funds swept in commercial demand deposit sweep programs. Based on quarterly observations from 1959:1--2002:4, cointegration tests indicate the existence of long-run relationships between the velocity of M1S and the corresponding opportunity cost of holding money, using either short-term or long-term interest rates. Tests find weaker evidence for M1RS and little support for MZM. (JEL E41, G21) Copyright 2006, Oxford University Press.
JEL-codes: E41 G21 (search for similar items in EconPapers)
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