Economy

Demand for money has been discussed a lot from the past both in the theoretical and in the empirical fields of economics. In Japan, low or almost interest rates has been prevailed and there has been a strong demand for Japanese government bond, so there is possibility that money demand has been changed and been apart from traditional one. Also, exchange rates against Japanese currency and stock prices have fluctuated largely recently due to the introducing unprecedented financial policy from the 2000s. They might have affect macroeconomic variables and money demand function. Empirical evidence show that demand for money is affected by real GDP, prices, and exchange rates, and is also stable, however, stock prices have not impacts on demand for money.