The demand for money at the zero interest rate bound

Bibliographic Data

ID21653244
AuthorsTsutomu Watanabe (0000-0002-9582-4656, Graduate School of Economics University of Tokyo Tokyo Japan, corresponding author), Tomoyoshi Yabu (Faculty of Business and Commerce, Keio University Tokyo Japan)
Year2023
Volume38
Issue6
Pages968-976
Publication date2023-09-01
Open AccessYes
TypeARTICLE
VenueJournal of Applied Econometrics (JOURNAL)
Journal identifiersISSN: 1099-1255 • E-ISSN: 0883-7252
PublisherWiley (PUBLISHER • GB)
DOI10.1002/jae.2983
OpenAlexW2898888590
LanguageEN
References cited20

This paper undertakes both a narrow and wide replication of the estimation of a money demand function conducted by Ireland ( American Economic Review , 2009). Using US data from 1980 to 2013, we show that the substantial increase in the money‐income ratio during the period of near‐zero interest rates is captured well by the log–log specification but not by the semi‐log specification, contrary to the result obtained by Ireland (2009). Our estimate of the interest elasticity of money demand over the 1980–2013 period is about one‐tenth that of Lucas's paper published in 2000, which used a log–log specification. Finally, neither specification satisfactorily fits post‐2015 US data

Demand curve · Demand for money · Econometrics · Economics · Income elasticity of demand · Interest rate · Mathematical economics · Microeconomics · Monetary economics · Statistics · Zero lower bound · Economic theories and models · Economic Theory and Policy · Mathematics · Monetary Policy and Economic Impact

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