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Money Demand, Consumer Demand and Relative Prices in Australia *
Author(s) -
CLEMENTS KENNETH W.,
NGUYEN PHUONG
Publication year - 1980
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.1980.tb01687.x
Subject(s) - economics , inflation (cosmology) , relative price , consumption (sociology) , monetary economics , demand for money , inflation rate , microeconomics , econometrics , macroeconomics , interest rate , social science , physics , sociology , theoretical physics
This paper develops a system‐wide model in which the consumer simultaneously allocates his income to money holdings and consumption. The model is estimated with annual Australian data and the results indicate that relative prices have a significant influence on money holdings. The results are used to decompose the rate of inflation into its. various components, the main ones being money supbly, real income and relative prices.