A Theorem Regarding Elasticities on the Transactions Demand for Money

This paper considers the class of inventory-theoretic transactions demand for money models and proves the following theorem: the sum of the income elasticity of money demand plus the absolute value of the interest elasticity is equal to unity. This result if often ignored in empirical simulation studies and Bayesian estimation.

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Year of publication:	1987
Authors:	Milbourne, Ross
Institutions:	Economics Department, Queen's University

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Series:	Working Papers.
Type of publication:	Book / Working Paper
Notes:	6 pages
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005490187