Money demand in an open economy

C. R. McKenzie

doi:10.1016/0889-1583(92)90013-T

Money demand in an open economy

C. R. McKenzie

Research output: Contribution to journal › Article › peer-review

7 Citations (Scopus)

Abstract

This paper considers the specification of the demand for money in Japan in an open economy context. The importance of considering the rates of return on foreign-currency-denominated assets and disaggregating money by currency denomination and the residence of the holder is emphasized. Estimated money demand equations for resident holdings of yen-denominated M1 and M2 are presented. These equations are used to determine the quantitative impact of the 1980 foreign exchange law on portfolio substitution between domestic money and foreign assets. Portfolio shifts in response to changes in economic variables and the foreign exchange law do not seem to have had a significant influence on the demand for money in Japan.

Original language	English
Pages (from-to)	176-198
Number of pages	23
Journal	Journal of The Japanese and International Economies
Volume	6
Issue number	2
DOIs	https://doi.org/10.1016/0889-1583(92)90013-T
Publication status	Published - 1992 Jun
Externally published	Yes

ASJC Scopus subject areas

Finance
Economics and Econometrics
Political Science and International Relations

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10.1016/0889-1583(92)90013-T

Cite this

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abstract = "This paper considers the specification of the demand for money in Japan in an open economy context. The importance of considering the rates of return on foreign-currency-denominated assets and disaggregating money by currency denomination and the residence of the holder is emphasized. Estimated money demand equations for resident holdings of yen-denominated M1 and M2 are presented. These equations are used to determine the quantitative impact of the 1980 foreign exchange law on portfolio substitution between domestic money and foreign assets. Portfolio shifts in response to changes in economic variables and the foreign exchange law do not seem to have had a significant influence on the demand for money in Japan.",

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note = "Funding Information: * The author thanks Yoshiharu Oritani, Yoichi Shinkai, seminar participants at the Bank of Japan, the editor, and two anonymous referees for helpful comments and suggestions. In addition, the author acknowledges the financial support of the Nihon Keizai Kenkyu Shorei Zaidan (Foundation to Promote Research on the Japanese Economy) and the University of Western Australia.",

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AB - This paper considers the specification of the demand for money in Japan in an open economy context. The importance of considering the rates of return on foreign-currency-denominated assets and disaggregating money by currency denomination and the residence of the holder is emphasized. Estimated money demand equations for resident holdings of yen-denominated M1 and M2 are presented. These equations are used to determine the quantitative impact of the 1980 foreign exchange law on portfolio substitution between domestic money and foreign assets. Portfolio shifts in response to changes in economic variables and the foreign exchange law do not seem to have had a significant influence on the demand for money in Japan.

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Money demand in an open economy

Abstract

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