"Inflationary Expectations and the Demand for Money: The Greek Experience, A Comment and Some Different Results" – A Replay

B issimis, Sophocles N.; Le en akis, John A. A icle "In la iona y Expec a ions and he Demand o Money: The G eek Expe ience, A Commen and Some Di e en Resul s" – A Replay K edi und Kapi al P o ided in Coope a ion wi h: Duncke & Humblo , Be lin Sugges ed Ci a ion: B issimis, Sophocles N.; Le en akis, John A. (1983) : "In la iona y Expec a ions and he Demand o Money: The G eek Expe ience, A Commen and Some Di e en Resul s" – A Replay, K edi und Kapi al, ISSN 0023-4591, Duncke & Humblo , Be lin, Vol. 16, Iss. 2, pp. 265-266, h ps://doi.o g/10.3790/ccm.16.2.265 This Ve sion is a ailable a : h ps://hdl.handle.ne /10419/292963 S anda d-Nu zungsbedingungen: Die Dokumen e au EconS o dü en zu eigenen wissenscha lichen Zwecken und zum P i a geb auch gespeiche und kopie we den. Sie dü en die Dokumen e nich ü ö en liche ode komme zielle Zwecke e iel äl igen, ö en lich auss ellen, ö en lich zugänglich machen, e eiben ode ande wei ig nu zen. So e n die Ve asse die Dokumen e un e Open-Con en -Lizenzen (insbesonde e CC-Lizenzen) zu Ve ügung ges ell haben soll en, gel en abweichend on diesen Nu zungsbedingungen die in de do genann en Lizenz gewäh en Nu zungs ech e. Te ms o use: Documen s in EconS o may be sa ed and copied o you pe sonal and schola ly pu poses. You a e no o copy documen s o public o comme cial pu poses, o exhibi he documen s publicly, o make hem publicly a ailable on he in e ne , o o dis ibu e o o he wise use he documen s in public. I he documen s ha e been made a ailable unde an Open Con en Licence (especially C ea i e Commons Licences), you may exe cise u he usage igh s as speci ied in he indica ed licence. h ps://c ea i ecommons.o g/licenses/by/4.0/ "In la iona y Expec a ions and he Demand o Money: The G eek Expe ience A Commen and Some Di e en Resul s" A Reply By Sophocles N. B issimis and John A. Le en akis, A hens Hima ios1 s commen s on ou a icle e e i s o ou implemen a ion o he a ional expec a ions app oach and second o ou empi ical esul ha he ma ke o Ml is segmen ed om he ma ke s o inancial and eal asse s. In his no e we pu po o cla i y a ew poin s in ou a icle and show ha Hima ios's c i icisms a e no well ounded. To a oid misunde s anding o wha ou assump ions abou a ional expec a ions a e, we should no e ha he expec ed a e o in la ion o be used as an oppo uni y cos a iable in he demand- o -money unc ion is de ined as he a e o in la ion expec ed o p e ail be ween ime and ime + 1 and should pe haps be w i en wi h wo subsc ip s, i.e. p + i• Thus he expec ed a e o in la ion and he ac ual a e o in la ion in ou pape do no e e o he same ime pe iod. In his way he app oxima ion used bypasses he es ima ion p oblem men ioned by Hima ios which is associa ed wi h he a ional expec a ions app oach. On he o he hand, Hima ios e oneously uses he "weakly" a ional p edic o P* = E (P /P _i, P -2 •••) as a second p oxy o he expec ed a e o in la ion. The co ec p oxy would be P *+1 = E(P + l/PuP -U ...). As ega ds ou conclusions ha he ma ke o M1 is segmen ed om he ma ke s o ei he inancial o eal asse s, hese a e based on he esul s o he subpe iod 1964 - 1978 and no o he whole pe iod 1955 - 1978. I seems ha ou s abili y es s showing ha he demand unc ion is uns able o e he pe iod 1955- 1978 (p. 564) wen unno iced by Hima ios. The in oduc ion o he dummy a iable o 1967 does no emo e he p oblem o ins abili y as indica ed by he applica ion o he Chow es o his equa ion (3). Also, he equa ions o Table II i es ima ed o he pe iod 1964 -1978 yield he same conclusion, namely ha he in e es a e is no OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.16.2.265 | Gene a ed on 2023-01-16 12:49:05 266 Sophocles N. B issimis and John A. Le en akis signi ican . As an example, he i s equa ion o Table II es ima ed o he pe iod 1964 - 1978 is as ollows: In (M/P) = - 0.70 + 0.52 In Y + 0 06 DUM - 0.004 In RS + 0.461 In (M/P) _! (1.14) (2.75) ^2.05) (0.07) (2.25) ( alues in pa en heses) R2 = 0.99 h = - 1.60 Simila ly, he expec ed a e o in la ion p oxied by he cu en a e o in la ion is ound o be insigni ican in he eal pa ial adjus men model o e he pe iod 1964 - 1978, i.e. In (M/P) = - 0.91 + 0.50 InY + 0.06 DUM - 0.16 In (P /P _i) + 0.50 In (M/P) _! (1.56) (2.95) (2.11) (0.94) (2.96) ( alues in pa en heses) R2 = 0.99 h = - 1.12 The e o e ou conclusions ha in he pe iod 1964 - 1978 he demand o Ml is no sensi i e o changes in oppo uni y cos do no seem o be a ec ed ei he by he in oduc ion o a dummy a iable o 1967 o by he use o he eal pa ial adjus men model. OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.16.2.265 | Gene a ed on 2023-01-16 12:49:05