This paper emphasizes that it is crucial to identify the proper specification of money demand as well as the appropriate monetary aggregate to find the exact welfare cost of inflation. The econometric test results obtained from the nonlinear form of money demand with Box–Cox restriction indicate that not the semi-logarithmic form but the double-log form with constant elasticity of less than one...

A similar negative correlation between inflation and stock prices prompted Modigliani and Cohn to conjecture that investors are prone to money illusion: they confuse nominal and real interest rates. When that is the case investors mistakenly discount real future cash flows with the nominal interest rate (or alternatively ignore the fact that cash flows tend to grow in nominal terms as inflation...

N [AlE 1982, the Ceder-al Reserve switched from a nonborrowed-r-eserves to a bom-n’owed-r-esemves operating procedune.’ Analysts genem-ally believe that the adoption of this pr-ocedure, which involves the use of a “borrowings assumption” specified by the Federal Open Market Committee (CONIC), n’epresents a policy reversal towar-d the setting of the fedem-al funds n-ate and away from direct mone...

A model of monetary exchange with private financial intermediation is constructed. Claims on financial intermedaries of two types are traded in transactions: circulating notes and deposits. There can be a role for the government in supplying liqudity, and level changes in the money supply accomplished through open market operations can be nonneutral. A Friedman rule is suboptimal, due to costs ...

A model of monetary exchange with private financial intermediation is constructed. Claims on financial intermedaries of two types are traded in transactions: circulating notes and deposits. There can be a role for the government in supplying liqudity, and level changes in the money supply accomplished through open market operations can be nonneutral. A Friedman rule is suboptimal, due to costs ...

Applying the simultaneous-equation model, this study finds that the output elasticity with respect to the real oil price is estimated to be -0.042, indicating that if the real oil price rises 10%, real GDP would decrease by 0.42%. In addition, real output in Korea is positively associated with the money supply, real deficit spending, and the real stock price and negatively influenced by real de...

although the word of “money laundering” isn’t very old in world literature, but attempted money laundering has a long history a long side with trade and commerce, as it always has been told. money laundering is a process that the incomes of criminal acts enter to the economic cycle and will purify dirty income. therefore, we can say launderers are actually committed two offenses, primaril...

‘thesource base consists of total currency outstanding (held by the public and in the vaults of depository institutions) plus the reserve balances of depository institutions at Federal Reserve Banks. The level of the money stock (currency in the hands of the public plus checkable deposits) that can be supported with a given level of the source base depends on resen’e requirements. If required r...

Each market has its singular characteristic. Its inner structure is directly responsible for the observed distributions of returns though this fact is widely overlooked. Big orders lead to doubling the tails. The behavior of a market maker with many or few “friends” who can reliably loan money or stock to him is quite different from the one without. After representing the inner market “case” we...

The basis for this paper is the pricing of multi-period rate of return guarantees. These guarantees can typically be found in life insurance and pension contracts. We derive closed form solutions, expressed by the cumulative multivariate normal probability distribution, for multiperiod rate of return guarantees on both a money market account and a stock. The guarantees of Hipp (1996), Persson a...