Inventory‐Theoretic Money Demand and Relative Price Dynamics

Hirokazu Ishise Nao Sudo

Journal of Money, Credit and Banking, 2013, vol. 45, issue 2‐3, 299-326

Abstract: We construct a two‐goods inventory‐theoretic money demand model and find that the model implies, in a monetary contraction, the decline in the prices of low cash‐intensity goods, durables, or luxuries outpaces that of high cash‐intensity goods, nondurables, or necessities. Using U.S. data, we show that our model’s predictions are consistent with the data.

Date: 2013
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https://doi.org/10.1111/jmcb.12003

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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:45:y:2013:i:2-3:p:299-326

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