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REPRESENTATIVE ECONOMIC AGENT, PROPENSITIES TO SAVE, AND MONEY DEMAND STABILITY
Author(s) -
Tin Jan
Publication year - 2011
Publication title -
bulletin of economic research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.227
H-Index - 29
eISSN - 1467-8586
pISSN - 0307-3378
DOI - 10.1111/j.1467-8586.2009.00344.x
Subject(s) - economics , aggregate demand , demand for money , homogeneous , aggregate (composite) , stability (learning theory) , microeconomics , speculative demand , monetary economics , simple (philosophy) , endogenous money , monetary policy , macroeconomics , computer science , philosophy , physics , materials science , epistemology , machine learning , composite material , thermodynamics
In simple‐sum aggregate money demand studies, long‐run elasticities and the propensities of individuals to save are presumed to be equal and can be depicted by those of the representative economic agent. This study uses panel data to test this hypothesis within the theoretical framework of the inventory‐theoretic transactions approach and finds it fails to hold. At the microeconomic level, money demand functions are not homogeneous, and the impacts of monetary policies on economic activities of households are not as stable as those suggested in aggregate money demand studies.