Limited Commitment and the Demand for Money.
Understanding money demand is important for our comprehension of macroeconomics and monetary policy. Its instability has made this a challenge. Common explications for the instability are financial regulations and financial innovations that shift the money demand function. We provide a complementary...
| Publicado en: | Economic Journal Vol. 128; no. 610; pp. 1128 - 1157 |
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| Autores principales: | , , |
| Formato: | Artículo |
| Publicado: |
Oxford University Press / USA
May2018
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| Materias: | |
| Acceso en línea: | Ver este registro en EBSCOhost |
| Sumario: | Understanding money demand is important for our comprehension of macroeconomics and monetary policy. Its instability has made this a challenge. Common explications for the instability are financial regulations and financial innovations that shift the money demand function. We provide a complementary view by showing that a model where borrowers have limited commitment can significantly improve the fit between the theoretical money demand function and the data. Limited commitment can also explain why the ratio of credit to M1 is currently so low, despite that nominal interest rates are at their lowest recorded levels. |
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