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

See all articles by Rubens Penha Cysne

Rubens Penha Cysne

Getulio Vargas Foundation (FGV) - FGV/EPGE Escola Brasileira de Economia e Finanças

David Turchick

Department of Economics, University of São Paulo (FEA-USP)

Date Written: December 31, 2007

Abstract

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

Cysne, Rubens Penha and Turchick, David, On the Consistency of Arbitrary Money-Demand Functions with the Sidrauski and the Shopping-Time Models (December 31, 2007). Ensaios Economics No. 666, Available at SSRN: https://ssrn.com/abstract=2387496 or http://dx.doi.org/10.2139/ssrn.2387496

Rubens Penha Cysne (Contact Author)

Getulio Vargas Foundation (FGV) - FGV/EPGE Escola Brasileira de Economia e Finanças ( email )

Praia de Botafogo 190/1125, CEP
Rio de Janeiro RJ 22253-900
Brazil
+55-21-552-5099 (Phone)
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David Turchick

Department of Economics, University of São Paulo (FEA-USP) ( email )

Av. Prof. Luciano Gualberto 908
Sao Paulo SP, 05508-900
Brazil

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