The Demand for M1 in the United States : A Commenton Baba, Hendry, and Starr

Author/Editor:

James M. Boughton

Publication Date:

March 1, 1993

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

A recent paper by Baba, Hendry, and Starr presents an error-correction model of the demand for M1 in the United States, which shows a dramatic improvement in both fit and stability over earlier models. This note estimates an alternative model with the same data set and draws two conclusions: that the improvements are due more to the use of complex dynamics than to the introduction of variables representing financial innovation, and that some of the economic properties are not robust with respect to minor changes in specification.

Series:

Working Paper No. 93/24

Subject:

English

Publication Date:

March 1, 1993

ISBN/ISSN:

9781451920963/1018-5941

Stock No:

WPIEA0241993

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

10

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