Currency demand by federal reserve cash office: what do we know? [An article from: Journal of Economics and Business]

This digital document is a journal article from Journal of Economics and Business, published by Elsevier in 2004. The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.

Description:
We evaluate US regional currency demands using a panel dataset covering the 37 Federal Reserve Cash Offices over 25 years from 1974 to 1998. We find strong support for the transaction specification, in which currency depends on a transaction measure and nominal interest rate for all denominations, large denominations, and US $20. This result is generally robust to the inclusion of wide variety of additional economic and demographic variables. Beyond the traditional transaction terms, seven other variables stand out in the specifications we entertain: the age distribution of the population, bankruptcies, crime, employment, housing permits and starts, and transfer payments. Finally, we show that international currency demand was generally an important influence during the period; when its influence is disregarded, the findings are muddied considerably.