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    U.S. money demand: surprising cross-sectional estimates.

    Sala-i-Martin X; Mulligan CB

    New Haven, Connecticut, Yale University, Economic Growth Center, 1992 Sep. 60 p. (Center Discussion Paper No. 671)

    We estimate money demand functions using cross-sections of U.S. states over the period 1929-1990. We arrive at a number of interesting conclusions: First, our estimates of the income elasticity lie between 1.3 and 1.5, significantly above one. Second, money demand is a stable function over an impressive sample period, 1929-1990. Third, income per capita is a better scale variable than consumption. And finally, after having been fairly constant between 1950 and 1980, the rate of technological progress (which determines the amount of money demanded for given incomes, price levels and interest rates) accelerated substantially over the 1980s. (author's)
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