Premium
Stability of the U.S. Short‐Run Money Demand Function, 1959–81
Author(s) -
LIN KUANPIN,
OH JOHN S.
Publication year - 1984
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/j.1540-6261.1984.tb04913.x
Subject(s) - stability (learning theory) , demand curve , econometrics , economics , demand for money , function (biology) , regression , constant (computer programming) , regression analysis , term (time) , monetary economics , mathematics , interest rate , microeconomics , statistics , computer science , physics , programming language , quantum mechanics , machine learning , evolutionary biology , biology
Stability tests are performed for the conventional U.S. money demand equation using switch regression techniques. This methodology provides for the identification of the shift point and the type of shift (abrupt or drift), and is conducive to hypothesis testing to determine the sources of the shift for the regression equation. Our findings do not support the contention that the 1974 change in money demand equation is a downward shift in the constant term, as suggested by many recent empirical money demand studies.