Saturday, March 11, 2017

Rare things happen in the long run, common things happen first

Long-run money demand redux: Most economists and central bankers no longer consider money supply measures to be useful for conducting monetary policy. One reason is the alleged instability of the relationship between monetary aggregates. This column uses data from 32 countries and spanning up to 100 years to argue that the long-run demand for money is alive and well. Results show a remarkable stability in long run money demand, both within and across countries. Nonetheless, short-run departures can be large and persistent, and further research is needed.

OK, when taxpayers agree to fixed time sequenced  payments over a 30 year period, then those bonds are in hugh demand.  That is 30 years of currency  insurance.

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