The Demand for Money: The Evidence from the Brazilian Economy

Abstract

It is the purpose of this paper to estimate the demand function for money in the Brazilian economy. Our empirical research is restricted to the period 1948-67. The selection of these two decades is dictated by the availability of data on national income. During this period (a) money income rose at an average yearly rate of 38 percent; (b) the rate of increase in the wholesale prices averaged 31 percent per year; (c) money supply rose at an average yearly rate of 36 percent; (d) the average rise in real income was 5.4 percent, but it fluctuated substantially in the interval -3 to + 15 percent; (e) the rate of change in real balances also presented high fluctuations with an average increase of 3.8 percent and a standard deviation of .084. A more detailed outline of this period is provided by the graphical representation of these variables in Figures 1, 2, and 3. Our empirical analysis rests on the theoretical structure of the modern quantity theory of money. This general approach to macroeconomics takes the demand schedule for real cash balances as a stable relation; changes in the supply schedule originate a process of substitution between money and non-money assets to bring real cash balances to their desired level. Individuals spend more or less in order to

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 28 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.