Money, interest rates, and risk

Myron B. Slovin, Marie Elizabeth Sushka

Research output: Contribution to journalArticle

14 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 languageEnglish (US)
Pages (from-to)475-482
Number of pages8
JournalJournal of Monetary Economics
Volume12
Issue number3
DOIs
StatePublished - Sep 1983
Externally publishedYes

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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