Because the Federal Reserve is responsible for controlling the value of money, economic policymakers are very concerned with forecasting the public's demand for money. Inflation is one of several factors that have made forecasting the demand for money increasingly difficult over the past fifteen...

Evan Koenig presents a model that has proved successful at reproducing the pattern of M2 growth over the first half of the decade of the 1990s. The model suggests that a large gap between long-term bond yields and M2 deposit rates contributed importantly to the slow money growth that persisted...

During the past two decades, financial innovations have proceeded at a rapid pace. These innovations have altered the liquidity of some assets relative to that of others. As a result, traditional measures of the money supply may have become less reliable as measures of household liquidity. Even...