Is the Baumol's 'Square Root Law' Still Relevant? Evidence from Micro-Level Data
7 Pages Posted: 15 Jul 2006
Date Written: June 2006
The objective is to test, from micro-level data, the complete general framework of the transaction demand for money à la Baumol established fifty years ago. The results confirm the relevancy of the Baumol's square root law while pointing out for the first time the impact of the subjective risk on cash holding.
Keywords: Demand for Money
JEL Classification: E41
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