BPEA | 1992 No. 2

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

discussants: N. Gregory Mankiw and
N. Gregory Mankiw Robert M. Beren Professor of Economics - Harvard University
Julio J. Rotemberg

1992, No. 2

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.