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| Jan Tin |
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| ''The Life-Cycle Motive and Money Demand: Further Evidence'' |
| ( 2008, Vol. 5 No.18 ) |
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| This study takes a closer look at the relationship between money demand and the life-cycle motive using panel data from the Survey of Income and Program Participation. Findings indicate that the life-cycle motive exerts a direct impact on household demand for interest-earning monetary assets, but not on non-interest-earning checking deposits. The strength of the relationship, however, varies among households with divergent characteristics. There is no evidence of a unitary income elasticity for both interest- and non-interest-yielding monetary assets. The demand for interest-earning monetary assets is very sensitive to changes in the own rate of interest, but the interest rate elasticity for non-interest-earning checking accounts is quite small. |
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| Keywords: life-cycle motive |
JEL: E4 - Money and Interest Rates: General
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| Manuscript Received : Apr 11 2008 | | Manuscript Accepted : May 30 2008 |
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