TY - JOUR
T1 - Monetary anticipation and the demand for money in the U.K.
T2 - Testing rationality in the Shock‐Absorber hypothesis
AU - Cuthbertson, Keith
AU - Taylor, Mark P.
PY - 1986/10
Y1 - 1986/10
N2 - The Carr‐Darby shock‐absorber hypothesis that unanticipated changes in the money supply cause changes in real balances but anticipated changes have a unit impact on the price level (and therefore leave real balances unchanged) is tested using two‐step and joint estimation techniques. For the U.K., two‐step methods appear to support the shock‐absorber hypothesis, but the superior joint estimation technique decisively rejects the hypothesis, particularly the implicit rational expectations cross‐equation restrictions.
AB - The Carr‐Darby shock‐absorber hypothesis that unanticipated changes in the money supply cause changes in real balances but anticipated changes have a unit impact on the price level (and therefore leave real balances unchanged) is tested using two‐step and joint estimation techniques. For the U.K., two‐step methods appear to support the shock‐absorber hypothesis, but the superior joint estimation technique decisively rejects the hypothesis, particularly the implicit rational expectations cross‐equation restrictions.
UR - https://www.scopus.com/pages/publications/84986409353
U2 - 10.1002/jae.3950010406
DO - 10.1002/jae.3950010406
M3 - Article
AN - SCOPUS:84986409353
SN - 0883-7252
VL - 1
SP - 355
EP - 365
JO - Journal of Applied Econometrics
JF - Journal of Applied Econometrics
IS - 4
ER -