A Neoclassical Analysis of the Demand for Real Cash Balances by Firms

Bibliographic Data

ID10175405
AuthorsEnid Dennis, V Kerry Smith (0000-0002-3908-7241)
Year1978
Volume86
Issue5
Pages793-813
Publication date1978-10-01
Open AccessNo
TypeARTICLE
VenueJournal of Political Economy (JOURNAL)
Journal identifiersISSN: 0022-3808 • E-ISSN: 1537-534X
PublisherUniversity of Chicago Press (PUBLISHER • US)
DOI10.1086/260712
OpenAlexW2010611363
LanguageEN
Citations received4
References cited13

This paper presents the results of an evaluation of the role of real cash balances as a factor input for 11 two-digit SIC code industries over the period 1952-73. Using a four-factor translog cost function for each industry along with duality theory, it was possible to estimate the partial elasticities of substitution and the elasticities of demand for all factors. The substitution elasticities between real cash balances and production labor as well as with capital were found to be significantly different from zero. The interest elasticity of demand for each varies with industry and ranges from -.22 to -.41. The overall findings suggest that the neoclassical model offers considerable promise for modeling the firm's demand for money

Capital (architecture · Cash · Demand curve · Derived demand · Duality (order theory · Econometrics · Economics · Elasticity (physics · Elasticity of substitution · Factors of production · Macroeconomics · Microeconomics · Monetary economics · Price elasticity of demand · Production (economics · Substitution (logic · Economic Growth and Productivity · Economic Theory and Policy · Fiscal Policy and Economic Growth · Mathematics

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