The Payment Period and the Demand for Broad Money -
Sobre o paper:
The paper assesses the impact of changes in the frequency of wage payments (e.g. monthly, weekly and so on) on the demand for different monetary aggregates (M1, M4 and so on). It aggregates information on the distribution of payment frequencies into a time series of the average payment period. The purpose of this exercise is to introduce the average payment period variable explicitly into conventional narrow and broad money demand equations. The paper has two main messages. The payments period variable does not belong to a narrow money demand equation but it belongs to a broad money demand equation. This is in accordance with the transaction motives theory, however transaction demand motives are clearly insufficient to explain the results found here.