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Reinterpretations of the Short-Run Demand for Money

Author

Listed:
  • Farrokh R. Zandi

    (York University)

Abstract

Two alternative functional forms of the demand for money that focus on how an economy as a whole adjusts its cash balances have been discussed in the literature. One functional form is obtained by regarding the money supply as exogenous and the price level as endogenous and the other by regarding the money supply as endogenous and the price level as exogenous. In this paper the author has offered a third view, a general view which regards both variables as endogenous such that the two alternative views are special cases. Subjecting these hypotheses to empirical testing, the author finds that the Canadian data for the period of 1973-86 reject the two special hypotheses in favor of his general specification.

Suggested Citation

  • Farrokh R. Zandi, 1991. "Reinterpretations of the Short-Run Demand for Money," Eastern Economic Journal, Eastern Economic Association, vol. 17(3), pages 281-290, Jul-Sep.
    • Handle: RePEc:eej:eeconj:v:17:y:1991:i:3:p:281-290
    as

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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume17/V17N3P281_290.pdf
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    References listed on IDEAS

    as
    1. Carr, Jack & Darby, Michael R., 1981. "The role of money supply shocks in the short-run demand for money," Journal of Monetary Economics, Elsevier, vol. 8(2), pages 183-199.
    2. Gregory C. Chow, 1966. "On the Long-Run and Short-Run Demand for Money," Journal of Political Economy, University of Chicago Press, vol. 74(2), pages 111-111.
    3. Coats, Warren L, Jr, 1982. "Modeling the Short-Run Demand for Money with Exogenous Supply," Economic Inquiry, Western Economic Association International, vol. 20(2), pages 222-239, April.
    4. Basil J. Moore, 1979. "The Endogenous Money Stock," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 2(1), pages 49-70, October.
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    More about this item

    Keywords

    Money; Supply;

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

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