Is the Price Elasticity of Money Demand Always Unity?Xiaojun Wang, University of Hawaii at Manoa Abstract Including both monetary gold and nonmonetary gold in a standard money-in-utility
model, we establish a presumption that the price elasticity of money demand should be less than one under commodity standards. Applying cointegration methods to data of the world, the United Kingdom, and the United States, we find support for the new theory. |