Abstract
This paper analyzes the role of the risk in the form of the volatility of open market interest rates as a factor in the demand for money. We demonstrate, using an inventory theoretic model of money demand, that increases in interest rate volatility will increase the demand for money. We then present empirical evidence that the demand for money has been influenced by alterations in the volatility of open market rates using standard specifications of the demand for money.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 475-482 |
| Number of pages | 8 |
| Journal | Journal of Monetary Economics |
| Volume | 12 |
| Issue number | 3 |
| DOIs | |
| State | Published - Sep 1983 |
| Externally published | Yes |
ASJC Scopus subject areas
- Finance
- Economics and Econometrics
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Cite this
Slovin, M. B., & Sushka, M. E. (1983). Money, interest rates, and risk. Journal of Monetary Economics, 12(3), 475-482. https://doi.org/10.1016/0304-3932(83)90066-1