Money, interest rates, and risk

Myron B. Slovin; Marie Elizabeth Sushka

doi:10.1016/0304-3932(83)90066-1

Money, interest rates, and risk

Myron B. Slovin, Marie Elizabeth Sushka

Research output: Contribution to journal › Article › peer-review

17 Scopus citations

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	https://doi.org/10.1016/0304-3932(83)90066-1
State	Published - Sep 1983
Externally published	Yes

ASJC Scopus subject areas

Finance
Economics and Econometrics

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10.1016/0304-3932(83)90066-1

Cite this

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title = "Money, interest rates, and risk",

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.",

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AB - 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.

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Money, interest rates, and risk

Abstract

ASJC Scopus subject areas

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