We present an empirical analysis of German money demand, money supply and monetary policy after German monetary union in 1990. Empirical models for velocity and forecast models for the money multiplier are estimated. Stability analysis reveals that structural stability of the demand for broad...

In this paper we argue that the relevant decision for the majority of US households is not the fraction of assets to be held in interest-bearing form, but whether to hold such assets at all (we call this ‘the decision to adopt’ financial technology). We show that the key variable governing...

This paper gives money a role in providing cheap collateral in a model of banking; this means that, besides the Taylor Rule, monetary policy can affect the risk-premium on bank lending to firms by varying the supply of M0 in open market operations, so that even when the zero bound prevails...

The partial-adjustment approach to the specification of the short-run demand for money has dominated the literature for more than a decade. There are three basic problems with this approach. First, the same lag structure is imposed on all variables, and such independent variables enters only as...

In this paper we propose a test of the hyperinflation model of money demand, which is valid under any assumption concerning agents' expectations, subject only to the restriction that forecasting errors are stationary. It is also demonstrated that highly efficient estimates of the model can be...

We extend the Baumol-Tobin cash inventory model to a dynamic environment, which allows for the possibility of withdrawing cash at random times at a low cost. This modification captures developments in withdrawal technology, such as the increasing diffusion of bank branches and ATM terminals. We...