Year: 2011
Type: article
Abstract: This article studies the effect that financial innovation, which has been very common in recent years, has on money. Using Japanese regional data and the money demand specification, we first provide evidence of instability in the simple money-output relationship. However, when this relationship is extended to include a proxy for a comprehensive measure of financial innovation, the model is found to be stable. Furthermore, consistent with economic theory, evidence is obtained of financial innovation leading to decreased demand for liquid financial assets. In this respect, in Japan demand deposits seem to possess very similar characteristics to cash over recent years.
Source: Applied Economics
Author: Jun Nagayasu
Institution: University of Tsukuba
Language: English
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2088965705