Toward a consistent estimate of the demand for monies: An application of the fourier flexible form

Money-Demand Variability: A Demand-Systems Approach

“…it can be argued that this is a valid claim, on the whole, partly because of the actual patterns (to be discussed later) and partly on the basis of other tests on different configurations of the same or other data (Ewis and Fisher 1985;Fisher 1989;Klonicki 1988). In all such runs, the elasticities have varied over time, with the largest variations coming at or near cyclical turning points.…”

“…Donovan (1978), who used a Gorman-polar-form representation of the indirect utility function found low substitutability between money and near money, but Offenbacher (1979), employing a flexible functional form (in this case the translog), found that the substitutability between currency and time deposits is largerin magnitude-than that between currency and demand deposits. Ewis andFisher (1984, 1985) performed experiments with t h e basic translog and the "seminonparametric" Fourier flexible form providing evidence of low substitutability or even complementarity among the monetary assets. Finally, Fayyad (1987) used the variable-parameter Rotterdam model to study the demands for five assets: food, nondurables, services, M I , and "all-but-MI" financial assets (included in the Federal Reserve's collection of 27 assets).…”

The New Divisia Monetary Aggregates

“…when the components are not perfect substitutes. Barnett's (1980aBarnett's ( , 1981a tests using monetary data resulted in rejection of the necessary and sufficient conditions in aggregation theory for sum aggregation (see also Feige and Pearce 1977;Offenbacher 1979;Ewis andFisher 1984a, 1984b;Serletis 1984aSerletis , 1984b). The present paper systematically compares the empirical performance of the Divisia and the sum monetary aggregates relative to various criteria relevant to policymaking.…”

The Demand for Assets and Optimal Monetary Aggregation

“…This literature follows the innovative works by Diewert (), Donovan (), and Barnett (, , , ) and utilizes the flexible functional forms approach to investigating the inter‐related problems of estimation of monetary asset demand functions and monetary aggregation. See, for example, Ewis and Fisher (, ), Serletis and Robb (), Serletis (, , ), Barnett, Fisher, and Serletis (), Fisher and Fleissig (, ), Fleissig and Swofford (), Fleissig and Serletis (), Serletis and Shahmoradi (, ), Jones et al. (), Barnett and Serletis (), and Barnett (), among others.…”