Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/71990
Authors: 
Ball, Laurence
Year of Publication: 
2002
Series/Report no.: 
Working Papers, The Johns Hopkins University, Department of Economics 481
Abstract: 
This paper estimates a long-run demand function for M1, using U.S. data for 1959-1993. The paper interprets deviations from this long-run relation with Goldfeld=s partial adjustment model. A key innovation is the choice of the interest rate in the money demand function. Most previous work uses a short-term market rate, but this paper uses the average return on near monies
Subjects: 
close substitutes for M1 such as savings accounts and money market mutual funds. This approach yields a predicted path of M1 velocity that closely matches the data. The volatility of velocity after 1980 is explained by volatility in the returns on near monies.
Document Type: 
Working Paper

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