How Robust are Money Demand Estimations?
JOURNAL ARTICLE
Cite JOURNAL ARTICLE
Style
Format
How Robust are Money Demand Estimations?
A Meta-Analytic Summary of Findings about Income Elasticities
Credit and Capital Markets – Kredit und Kapital, Vol. 38 (2005), Iss. 4 : pp. 515–540
Additional Information
Article Details
Author Details
Markus Knell, Vienna
Helmut Stix, Vienna
References
-
Arrau, P./De Gregori, J./Reinhart, C. M./Wickham, P. (1995): 'The Demand for Money in Developing Countries: Assessing the Role of Financial Innovation', Journal of Development Economics 46 (2), 317-40.
Google Scholar -
Ball, L. (2001): 'Another Look At Long-Run Money Demand', Journal of Monetary Economics 47 (1), 31-44.
Google Scholar -
Baumol, W. J. (1952): 'The Transaction Demand for Cash: An Inventory Theoretic Approach', The Quarterly Journal of Economics 66 (4), 545-56.
Google Scholar -
Carlson, J. B./Hoffman, D. L./Keen, B. D./Rasche, R. H. (2000): 'Results of a Study of the Stability of Cointegrating Relations Comprised of Broad Monetary Aggregates', Journal of Monetary Economics 46 (2), 345-83.
Google Scholar -
Choi, W. G./Oh, S. (2003): 'A Money Demand Function with Output Uncertainty, Monetary Uncertainty, and Financial Innovations', Journal of Money, Credit, and Banking 35 (5), 685-709.
Google Scholar -
Fase, M. (1994): 'In Search for Stability: An Empirical Appraisal of the Demand for Money in the G7 and EC Countries', De Economist 142 (4), 421-454.
Google Scholar
Abstract
In this paper we conduct a meta-analysis of empirical money demand studies involving almost 500 individual money demand estimations. We analyze whether the wide variety of results can be explained by characteristics of the studies or the imprecision of individual estimates. We find that estimates for the income elasticity of money are systematically related to various study characteristics (e.g., broadness of the monetary aggregate, inclusion of financial innovation and wealth). Nevertheless, a substantial part of the variability remains unexplained. (JEL E41, E52)