| Sumario: | New estimates are supplied for the income elasticity of money demand. The study estimates cross-sectionally rather than with time series analysis the money demand functions of 48 U.S. states from 1929 to 1990. These equations demonstrate that income elasticity of demand deposits and of a broader measure of money falls between 1.3 and 1.5 for the entire period. In addition, year-by-year cross-sectional estimates of the income elasticity for these 2 measures almost always fall well above 1.0 during 1929-90, even during the Depression and World War II, and do not differ individually from the estimates for the sample period taken as a whole. The study also reveals that income per capita is a better scale variable than consumption and that during some time periods agricultural regions have demanded more money than would be expected given their incomes. The study's policy implications are discussed, and comments and discussions follow.
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