Current Issues in Monetary Policy in the United States and Japan: The Predictability of Money Demand

Synopsis

This study investigates the econometric properties of the demand for money function as it affects monetary policy. Particular emphasis is placed throughout on the general properties of conventional and alternative demand for money specifications and on the predictability of that demand over time. The author tests proposed explanations for the recent abnormal behavior of U.S. money demand by using a new data set--the Japanese data base--for the first time, offering important new insights into the general properties of money demand functions.