The Demand for Money: A Cross-Section Study of British Business Firms.
Some substantive issues currently discussed by monetary theorists are the definition of money, the stability of the demand Tor money, and the relative importance of the arguments in the money demand function. Friedman, in a study of the behaviour of aggregate cash balances and velocity in the United...
| Published in: | Economica Vol. 33; no. 131; pp. 288 - 301 |
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| Format: | Article |
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Wiley-Blackwell
Aug66
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| Online Access: | View this record in EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=hlh&AN=4513994&site=ehost-live header: @attributes: shortDbName: hlh uiTerm: 4513994 longDbName: Humanities International Complete uiTag: AN controlInfo: bkinfo: jinfo: jid: 00130427 ECA jtl: Economica issn: 00130427 maglogo: Y pubinfo: dt: Aug66 vid: 33 iid: 131 pid: 480 pub: Wiley-Blackwell artinfo: ui: 4513994 10.2307/2552405 ppf: 288 ppct: 13 formats: tig: atl: The Demand for Money: A Cross-Section Study of British Business Firms. aug: au: De Alessi, Louis affil: Duke University, Durham, N.C. su: Money market Business finance Demand for money Money supply Bank deposits Interest rates Economic models Banking industry sug: subj: Money market Business finance Demand for money Money supply Bank deposits Interest rates Economic models Banking industry ab: Some substantive issues currently discussed by monetary theorists are the definition of money, the stability of the demand Tor money, and the relative importance of the arguments in the money demand function. Friedman, in a study of the behaviour of aggregate cash balances and velocity in the United States, included time deposits in his definition of money. The empirical results that he observed led him to conclude, among other things, that the wealth elasticity of the demand for money is greater than one and that the demand for money is not statistically sensitive to changes in the rate of interest. Meltzer has suggested that these results are due, at least in part, to Friedman's definition of money. Meltzer's empirical work, also based on US data, supports the contention that money, defined as currency plus demand deposits, yields a stable demand function which has a wealth elasticity of about one and is sensitive to changes in the rate of interest; moreover, his evidence suggests that the broader the definition of money, the greater is the wealth elasticity and the smaller is the interest elasticity observed. The theoretical considerations that Meltzer adduces to support his evidence are convincing enough to justify further study of the issues involved. The present study has two major objectives. The first is to obtain additional evidence concerning the predictive content of the wealth adjustment model. Although several implications of this model have already been supported by US data, repeated tests, using different data drawn from different populations, are necessary to explore the range of application and to obtain additional evidence on the power of the hypotheses. This study investigates the results of using British data to evaluate the hypotheses. The second objective is to evaluate empirically the validity of Meltzer's argument. To pursue both objectives, this study observes cross-sections of two samples of British firms on December 31 of each year from 1948 to 1957. Section I contains a brief statement of the economic model used to predict the cash holding behaviour of business firms. Section II specifies the samples observed, and the empirical counterparts to the symbols used in the model. Section III presents the evidence from the cross section study, and section IV contains a few concluding comments. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: Y dt: @attributes: year: 1966 holdings: @attributes: islocal: N |
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