On the Variable Money Demand Elasticity: The Case of Taiwan

This study attempts to examine the money-demand function for Taiwan by applying the BCEA model of Savin and White (1978). Major Findings are: (1) the conventional double-log form is inappropriate for Taiwan; (2) the income elasticity of money demand rose from 1.29 in 1969. 2 to 1.74 in 1988. 3, compared to a range of 0.6 to 0.8 estimated for the U.S.; and (3) the interest elasticity of money demand varied from ?0.25 ti ?0.62 during the same period. The author has also found that estimated income and interest elasticities of money demand for the U.S. varied widely during 1970-1987. [310]