U.S. NARROW MONEY FOR THE TWENTY-FIRST CENTURY |
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| Authors: | DONALD H DUTKOWSKY BARRY Z CYNAMON BARRY E JONES |
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| Institution: | Dutkowsky:;Professor, Department of Economics, Maxwell School of Citizenship and Public Affairs, Syracuse University, Syracuse NY 13244. Phone 1-315-443-1918, Fax 1-315-443-3717, E-mail Cynamon:;Undergraduate Student, Department of Economics, Washington University in St. Louis, Campus Box 1208, St. Louis MO 63130-4899. Phone 1-314-935-5670, Fax 1-314-935-4156, E-mail Jones:;Assistant Professor, Department of Economics, Binghamton University, Binghamton NY 13902-6000. Phone 1-607-777-4795, Fax 1-607-777-2681, E-mail |
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| Abstract: | This study focuses on sweep programs in establishing conceptually appropriate and reliable measures of narrow money. We propose the aggregates M1RS = M1 + holdings of funds swept in retail sweep programs, and M1S = M1RS + holdings of funds swept in commercial demand deposit sweep programs. Based on quarterly observations from 1959:1–2002:4, cointegration tests indicate the existence of long-run relationships between the velocity of M1S and the corresponding opportunity cost of holding money, using either short-term or long-term interest rates. Tests find weaker evidence for M1RS and little support for MZM. (JEL E41 , G21 ) |
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