IS THE PRICE ELASTICITY OF MONEY DEMAND ALWAYS UNITY? |
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| Authors: | PAUL EVANS XIAOJUN WANG |
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| Institution: | 1. Evans: Professor, Department of Economics, Ohio State University, Columbus, OH 43210. Phone 1‐614‐292‐0072, Fax 1‐614‐292‐3906, E‐mail evans.21@osu.edu;2. We wish to thank the editor and two anonymous referees for helpful suggestions.;3. Wang: Assistant Professor, Department of Economics, University of Hawaii, Honolulu, HI 96822. Phone 1‐808‐956‐7721, Fax 1‐808‐956‐4347, E‐mail xiaojun@hawaii.edu |
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| Abstract: | Including both monetary gold and nonmonetary gold in a standard money‐in‐utility model, we establish a presumption that the price elasticity of money demand should be less than 1 under commodity standards. Applying cointegration methods to data of the world, the United Kingdom, and the United States, we find support for the new theory. (JEL E41, E42) |
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