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J. Risk Financial Manag. 2019, 12(1), 1; https://doi.org/10.3390/jrfm12010001

Asymmetric Effects of Policy Uncertainty on the Demand for Money in the United States

The Center for Research on International Economics and Department of Economics, The University of Wisconsin-Milwaukee, Milwaukee, WI 53201, USA
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Author to whom correspondence should be addressed.
Valuable comments of four anonymous reviewers of this journal are greatly appreciated. Remaining errors, however, are ours.
Received: 12 October 2018 / Revised: 12 November 2018 / Accepted: 19 November 2018 / Published: 20 December 2018
(This article belongs to the Special Issue Currency Crisis)
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Abstract

A comprehensive measure of economic uncertainty, known as “Policy Uncertainty”, which was constructed by the Economic Policy Uncertainty Group by searching popular newspapers for uncertain terms associated with economic factors and its impact on macro variables, is gaining momentum. Although some researchers have assessed its impact on the demand for money in a few countries, we considered the U.S.A. demand for money one more time and showed that when a linear money demand was estimated, policy uncertainty had no long-run effects. However, when a nonlinear model was estimated, the results showed that while increased policy uncertainty induces the public to hold less money in the long run, decreased uncertainty has no long-run effects, a clear sign of asymmetric response. View Full-Text
Keywords: policy uncertainty; money demand; the U.S.A., asymmetry; nonlinear ARDL policy uncertainty; money demand; the U.S.A., asymmetry; nonlinear ARDL
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Bahmani-Oskooee, M.; Maki-Nayeri, M. Asymmetric Effects of Policy Uncertainty on the Demand for Money in the United States. J. Risk Financial Manag. 2019, 12, 1.

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