Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/128031 
Year of Publication: 
2005
Series/Report no.: 
Working Paper No. 05.01
Publisher: 
Swiss National Bank, Study Center Gerzensee, Gerzensee
Abstract: 
Recent time-series evidence has re-confirmed the forecasting ability of Swiss broad money. The same money demand studies and others, however, find that the income elasticity is greater than one. Such parameter estimates are difficult to reconcile with transactions demand theory. This study re-examines the estimates for income elasticity in money demand based on cross-regional evidence for Switzerland. Particular attention is given to the influence of regional financial sophistication. The cross-cantonal results find that the income elasticity lies between 0.4 and 0.6. This discrepancy between the two empirical methodologies has important consequences for the conduct of Swiss monetary policy.
Subjects: 
Money Demand
Cross-Regional Estimates
Regional Financial Sophistication
JEL: 
C21
E41
E50
Document Type: 
Working Paper

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