The Asymptotically Ideal Model (AIM), first estimated by Barnett and Yue (1998), based on the Muntz-Szatz series expansion as described by Barnett and Jonas (1983) is used to estimate money demand using quarterly US data from 1960 to the first quarter of 2004. We find that monetary assets are...

We exposit the link between money, velocity and prices in an inventory-theoretic model of the demand for money and explore the extent to which such a model can account for the short-run volatility of velocity, the negative correlation of velocity and the ratio of money to consumption, and the...

Conventional estimates of the seigniorage-maximizing inflation rate often make use of the Cagan form, which implies a constant semielasticity of money demand with respect to inflation. This paper shows that the elasticity of substitution in transactions between money and bonds determines how the...

Among the many troublesome econometric relationships, the demand for money has proved especially recalcitrant, as evidenced by a long history of tinkering with basic specifications, always in response to some recent perceived forecast failure. The shortcomings of this approach and an alternative...