, ; ; ; "ActiveFedora::Aggregation::ListSource" . a , ; "International Evidence on Long-Run Money Demand"; ; "jannelle.ruswick@mpls.frb.org"; ; "Lucas, Jr., Robert E.", "Benati, Luca", "Weber, Warren E.", "Nicolini, Juan Pablo"; "Federal Reserve Bank of Minneapolis"; "Cointegration", "Long-run money demand"; "C32 - Multiple or Simultaneous Equation Models: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models", "E41 - Demand for Money"; "We explore the long-run demand for M1 based on a dataset comprising 38 countries and relatively long sample periods, extending in some cases to over a century. Overall, we find very strong evidence of a long-run relationship between the ratio of M1 to GDP and a short-term interest rate, in spite of a few failures. The standard log-log specification provides a very good characterization of the data, with the exception of periods featuring very low interest rate values. This is because such a specification implies that, as the short rate tends to zero, real money balances become arbitrarily large, which is rejected by the data. A simple extension imposing limits on the amount that households can borrow results in a truncated log-log specification, which is in line with what we observe in the data. We estimate the interest rate elasticity to be between 0.3 and 0.6, which encompasses the well-known squared-root specification of Baumol and Tobin."^^; "2019-06-18"; "2019-11-07T16:23:18.78435805+00:00"^^; "https://doi.org/10.21034/sr.587"; ; "https://creativecommons.org/licenses/by-nc/4.0/"; "2021-02-16T20:13:54.142822625+00:00"^^; "https://creativecommons.org/licenses/by-nc/4.0/"; "Research Paper"; "470", "832", "65", "562"; "Staff report (Federal Reserve Bank of Minneapolis. Research Department)"; "587"; "Long-run money demand", "Cointegration"; ; ; ; ; "Federal Reserve Bank of Minneapolis. Research Department"; "An earlier version of this Staff Report circulated as [Working Paper 737](https://doi.org/10.21034/wp.737 \"Working Paper 737\")."^^, "Published in _Journal of Monetary Economics_ (vol. 117, January 2021, pp. 43-63), https://doi.org/10.1016/j.jmoneco.2020.07.003."^^, "[Online appendix](https://doi.org/10.21034/sr.588 \"Online Appendix\")"^^; ; "Publication" . ; ; . ; ; .