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Working Paper
On the Stability of Money Demand
We show that regulatory changes that occurred in the banking sector in the early eighties, which considerably weakened Regulation Q, can explain the apparent instability of money demand during the same period. We evaluate the effects of the regulatory changes using a model that goes beyond aggregates as M1 and treats currency and different deposit types as alternative means of payments. We use the model to construct a new monetary aggregate that performs remarkably well for the entire period 1915-2012.
Discussion Paper
Liquidity crises
Journal Article
After Keynesian macroeconomics
Report
International Evidence on Long-Run Money Demand
We explore the long-run demand for M1 based on a dataset comprising 38 countries and relatively long sample periods, extending in some cases to over a century. Overall, we find very strong evidence of a long-run relationship between the ratio of M1 to GDP and a short-term interest rate, in spite of a few failures. The standard log-log specification provides a very good characterization of the data, with the exception of periods featuring very low interest rate values. This is because such a specification implies that, as the short rate tends to zero, real money balances become arbitrarily ...
Report
Online Appendix for: International Evidence on Long-Run Money Demand
This appendix supports Staff Report 587. An earlier version of this Staff Report circulated as Working Paper 738.
Journal Article
Liquidity: meaning, measurement, management
This article is based on the author?s Homer Jones Memorial Lecture delivered at the Federal Reserve Bank of St. Louis, April 2, 2014.
Working Paper
International Evidence on Long-Run Money Demand
We explore the long-run demand for M1 based on a data set that has comprised 32 countries since 1851. In many cases, cointegration tests identify a long-run equilibrium relationship between either velocity and the short rate or M1, GDP, and the short rate. Evidence is especially strong for the United States and the United Kingdom over the entire period since World War I and for moderate and high-inflation countries. With the exception of high-inflation countries?for which a ?log-log? specification is preferred?the data often prefer the specification in the levels of velocity and the short ...
Report
The Industrial Revolution: past and future
"We live in a world of staggering and unprecedented income inequality," writes Nobel Laureate Robert Lucas in the 2003 annual report essay. Lucas goes on to use economic history to frame explanations and present possible solutions to this global quandary.