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The Demand for Money in a Simultaneous-Equation Framework

Author

Listed:
  • A. M. M. Jamal

    (Southeastern Louisiana University)

  • Yu Hsing

    (Southeastern Louisiana University)

Abstract

This paper estimates the demand for money in the U.S. within a model where the money supply function is also considered simultaneously. The explanatory variables for the money demand function include a measure of the interest rate, real income and the exchange rate. The explanatory variables for the money supply function include the output gap and the inflation gap in addition to an interest rate. The parameters estimated for the two equations avoid being biased or inconsistent. The results should be useful to both macroeconomic researchers and policy makers.

Suggested Citation

  • A. M. M. Jamal & Yu Hsing, 2011. "The Demand for Money in a Simultaneous-Equation Framework," Economics Bulletin, AccessEcon, vol. 31(2), pages 1929-1934.
  • Handle: RePEc:ebl:ecbull:eb-11-00325
    as

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    References listed on IDEAS

    as
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    6. Stephen M. Goldfeld, 1973. "The Demand for Money Revisited," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 4(3), pages 577-646.
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    Cited by:

    1. Jana Juriová, 2016. "Money Market Equilibrium in the Czech Republic," Prague Economic Papers, Prague University of Economics and Business, vol. 2016(3), pages 321-334.

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    More about this item

    Keywords

    Money demand; money supply; simultaneous-equation model; output gap; inflation gap; three stage least squares;
    All these keywords.

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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