Lin is associate professor in the Department of Economics and Oh is associate professor and head of the Department of Finance and Law at Portland State University. We would like to thank Tom Potiowsky for his comments and the First Interstate Bank of Oregon for providing the Summer Faculty Research grant to complete this paper.
Stability of the U.S. Short-Run Money Demand Function, 1959–81
Article first published online: 30 APR 2012
1984 The American Finance Association
The Journal of Finance
Volume 39, Issue 5, pages 1383–1396, December 1984
How to Cite
LIN, K.-P. and OH, J. S. (1984), Stability of the U.S. Short-Run Money Demand Function, 1959–81. The Journal of Finance, 39: 1383–1396. doi: 10.1111/j.1540-6261.1984.tb04913.x
- Issue published online: 30 APR 2012
- Article first published online: 30 APR 2012
Stability tests are performed for the conventional U.S. money demand equation using switch regression techniques. This methodology provides for the identification of the shift point and the type of shift (abrupt or drift), and is conducive to hypothesis testing to determine the sources of the shift for the regression equation. Our findings do not support the contention that the 1974 change in money demand equation is a downward shift in the constant term, as suggested by many recent empirical money demand studies.