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On Empirical Implications of Highly Interest-Elastic Money Demand : A Note

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  • Nakashima, Kiyotaka
  • Saito, Makoto

Abstract

Based on a standard model of money demand, this paper first shows that a relationship between money supply and prices may be substantially weakened when money demand is highly interest-elastic, and then presents empirical evidence for this implication using the Japanese money market data for the sample period, 1985-1999.

Suggested Citation

  • Nakashima, Kiyotaka & Saito, Makoto, 2009. "On Empirical Implications of Highly Interest-Elastic Money Demand : A Note," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 50(1), pages 29-34, June.
    • Handle: RePEc:hit:hitjec:v:50:y:2009:i:1:p:29-34
    DOI: 10.15057/17469
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    References listed on IDEAS

    as
    1. Bae, Youngsoo & Kakkar, Vikas & Ogaki, Masao, 2006. "Money Demand in Japan and Nonlinear Cointegration," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 38(6), pages 1659-1667, September.
    2. Nakashima, Kiyotaka & Saito, Makoto, 2012. "On the comparison of alternative specifications for money demand: The case of extremely low interest rate regimes in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 26(3), pages 454-471.
    3. Ryuzo Miyao, 2002. "Liquidity Trap and the Stability of Money Demand: Is Japan Really Trapped at the Zero Bound?," Discussion Paper Series 127, Research Institute for Economics & Business Administration, Kobe University.
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    Citations

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    Cited by:

    1. Nicholas Apergis, 2015. "Money Demand Sensitivity to Interest Rates: The Case of Japans Zero-Interest Rate Policy," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(9), pages 1043-1049, September.
    2. Ibhagui, Oyakhilome, 2019. "Eurozone Real Output and Covered Interest Parity Deviations: Can Stronger Real Output Lessen the Deviations?," MPRA Paper 92305, University Library of Munich, Germany, revised 20 Feb 2019.
    3. Ibhagui, Oyakhilome, 2021. "Real Output and Cross-Currency Basis Swap Spreads: Evidence from the Eurozone," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 75(C).
    4. Nakashima, Kiyotaka & Saito, Makoto, 2012. "On the comparison of alternative specifications for money demand: The case of extremely low interest rate regimes in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 26(3), pages 454-471.

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    More about this item

    Keywords

    money demand; zero interest-rate policy; cointegration;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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