U. S. Money Demand: Surprising Cross-Sectional Estimates

Casey B. Mulligan and

CBM

Casey B. Mulligan University of Chicago

Xavier Sala-I-Martin

XS

Xavier Sala-I-Martin Yale University

Discussants: N. Gregory Mankiw and

N. Gregory Mankiw Robert M. Beren Professor of Economics - Harvard University

Julio J. Rotemberg

JJR

Julio J. Rotemberg

THE SPECIFICATION of the money demand function has important implications for a number of macroeconomic issues. First, if policymakers are to be responsible for achieving price stability, they need reliable quantitative estimates of money demand. In particular, if the money demand function is stable, the income elasticity yields the rate of money growth that is consistent with long-run price stability.