Bayesian Information and the Precautionary Demand for Money
Bibliographic Data
| ID | 10182002 |
|---|---|
| Authors | Bryan Stanhouse (corresponding author), Bryan E Stanhouse |
| Year | 1982 |
| Volume | 90 |
| Issue | 3 |
| Pages | 596-605 |
| Publication date | 1982-06-01 |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0022-3808 • E-ISSN: 1537-534X |
| Publisher | University of Chicago Press (PUBLISHER • US) |
| DOI | 10.1086/261076 |
| OpenAlex | W1966409767 |
| Language | EN |
| References cited | 3 |
In this paper, I demonstrate how Bayesian information may be analyzed as a bona fide input in determining the optimal level of precautionary balances to hold. I first examine the impact of information in revising the expected total cost function and the effect of information on optimal precautionary cash balances. I then derive the optimal demand for information, and the comparative statics of θ * are developed. Finally, I examine the elasticity of precautionary balances to scale under the assumption that the degree of uncertainty of cash needs is a decision variable for the firm or household to determine. Surprisingly, monetary balances demonstrate significant economies of scale with endogenous information
Bayesian probability · Economics · Computer Science · Economic, financial, and policy analysis · Market Dynamics and Volatility · Monetary Policy and Economic Impact
| Highly cited | No |
|---|