The (un)demand for money in Canada

Arbeitspapier

A novel dataset from the Bank of Canada is used to estimate the deposit functions for banknotes in Canada for three denominations: $1,000, $100 and $50. The broad flavour of the empirical findings is that denominations are different monies, and the structural estimates identify the underlying sources of the non-neutrality. There is evidence of large and significant deposit costs for the highest-value denomination, the $1,000 banknote, but insignificant costs for the $100 and $50 denominations. The results imply that the interest rate elasticity of deposit is positive for the $1,000 but negative for the $100 and the $50. Third, 5 percent of the $1,000, 30 percent of the $100 and 22 percent of the $50 banknotes ever issued by the Bank of Canada do not circulate through financial institutions (in Canada). Finally, we find evidence that the Lehman Brothers crisis increased the deposit probability by a factor of 2-3 for the $1,000 banknote for a majority of the population in Canada.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Bank of Canada Staff Working Paper ; No. 2018-20

Classification and Topics

• Classification: Wirtschaft ; Demand for Money ; Multiple or Simultaneous Equation Models: Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models ; Multiple or Simultaneous Equation Models: Instrumental Variables (IV) Estimation
• Subject: Bank notes ; Econometric and statistical methods

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dunbar, Geoffrey ; Jones, Casey
• Event: Veröffentlichung
• (who): Bank of Canada
• (where): Ottawa
• (when): 2018

Further information

• DOI: doi:10.34989/swp-2018-20
• Handle: http://hdl.handle.net/10419/197873
• Last update: 10.03.2025, 11:45 AM CET