On the Consistency of Arbitrary Money-Demand Functions with the Sidrauski and the Shopping-Time Models
Ensaios Economics No. 666
34 Pages Posted: 31 Jan 2014
Date Written: December 31, 2007
This paper investigates which properties money-demand functions have to satisfy to be consistent with multidimensional extensions of Lucas (2000) versions of the Sidrauski (1967) and the shopping-time models. We also investigate how such classes of models relate to each other regarding the rationalization of money demands. We conclude that money demand functions rationalizable by the shopping-time model are always rationalizable by the Sidrauski model, but that the converse is not true. The log-log money demand with an interest-rate elasticity greater than or equal to one and the semi-log money demand are counterexamples.
Keywords: Money Demand, Rationalization, Integrability, Sidrauski, Shopping- time, Interest-Bearing Assets
JEL Classification: C0, E40, D50, D60
Suggested Citation: Suggested Citation