Technological Progress and its Effects on the Interaction Between Money Supply and Demand: A Cointegration Approach
The purpose of this paper is to analyze the significance of the effect current payment technologies ha e had on money supply and demand. Specific attention will be giv n to M1 and M2 stocks and velocities, th Fed Funds Rate and National Income, and how their interaction with each other has been affectrd by technology development. Using Electronic Fund Transfer and Automated Teller Machine introduction as a proxy or current technological development in a cointegration test model it is found that current payment technologies have had mixed effects on money supply and demand, and the interaction between their associated factor within the IS-LM framework Section II summarizes the existing literature concerning payments technology and their impact on the economy. Section IIl details the resulting theory and hypothe is. Section IV introduces the empirical model used to te t the hypothesis and Section V present the results of these models.Section VI concludes the study, presenting possible implications and directions for further research.
Holly Jr. '99, Patrick J., "Technological Progress and its Effects on the Interaction Between Money Supply and Demand: A Cointegration Approach" (1999). Honors Projects. 69.