Publication at Faculty of Social Sciences |
2014
Abstract
The income elasticity of money demand is one of the most frequently estimated parameters in economics, but the individual estimates of the elasticity vary a lot. In this paper we present a quantitative survey of the literature estimating this parameter.
We collect previous empirical estimates of the elasticity from many studies and analyze why the estimated elasticities differ so much. We test whether the literature is affected by the so-called publication selection bias; that is, if estimates consistent with mainstream theories tend to be published more often.
Moreover, we analyze whether the reported estimates of the elasticity differ systematically across countries, estimation methods, and time periods.