The Demand for Broad Money in the United Kingdom, 1878-1993

Scandinavian Journal of Economics, Vol. 100, Issue 1 (1998)

Posted: 24 Feb 1998

See all articles by Neil R. Ericsson

Neil R. Ericsson

Board of Governors of the Federal Reserve System

David F. Hendry

University of Oxford - Department of Economics

Kevin M. Prestwich

AMS (American Management Systems, Inc.)

Abstract

Using annual data from Friedman and Schwartz (1982), Hendry and Ericsson (1991a) developed an empirical model of the demand for broad money in the United Kingdom over 1878-1975. We update that model over 1976-1993, accounting for changed data definitions and clarifying the concept of constancy. With appropriate measures of opportunity cost and credit deregulation, the model's parameters are empirically constant over the extended sample, which was economically turbulent. Policy implications follow for parameter nonconstancy and predictive failure, causation between money and prices, monetary targeting, deregulation and financial innovation, and the effect of policy on economic agents' behavior.

JEL Classification: E41, C52

Suggested Citation

Ericsson, Neil R. and Hendry, David F. and Prestwich, Kevin M., The Demand for Broad Money in the United Kingdom, 1878-1993. Scandinavian Journal of Economics, Vol. 100, Issue 1 (1998), Available at SSRN: https://ssrn.com/abstract=56202

Neil R. Ericsson (Contact Author)

Board of Governors of the Federal Reserve System ( email )

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David F. Hendry

University of Oxford - Department of Economics ( email )

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Kevin M. Prestwich

AMS (American Management Systems, Inc.) ( email )

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Fairfax, VA 22033
United States
703-267-8989 (Phone)
703-227-6704 (Fax)

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