Money demand and equity markets

Seth B. Carpenter and Joe Lange

No 2003-03, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Money demand in part reflects a portfolio decision. As equities have become a significant store of household wealth, it seems plausible that variations in equity markets could affect money demand. We re-specify a standard money demand equation to include stock market volatility and revisions to analyst earnings projections. We find that these equity market variables are statistically significant and reduce the errors from money demand models.

Keywords: Stock exchanges; Demand for money (search for similar items in EconPapers)
Date: 2003
New Economics Papers: this item is included in nep-fin, nep-fmk and nep-mac
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Citations: View citations in EconPapers (4)

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