Academic papers & Book chapters

Academic papers

  • The drivers of Bitcoin demand: A short and long-run analysis

    Since 2010, Bitcoin has shown high price volatility, spurring a debate regarding the underlying reasons that lead economic agents to demand it. This paper analyzes the demand for Bitcoin in order to determine whether it stems from Bitcoin’s utility as a medium of exchange, a speculative asset, or as a safe-haven commodity. We examine Bitcoin from a monetary-theory perspective and build a demand model that explores both the long-term and short-term relationships among variables. Our findings show that Bitcoin behaves as a speculative asset in the short term. In the long term, however, speculation does not seem to influence demand for Bitcoin. Instead, demand might be driven by expectations regarding Bitcoin’s future utility as a medium of exchange. [Continue reading: IRFA]
    • The demand for Divisia money in the United States: Evidence from the CFS Divisia M3 aggregate

      In this paper, we analyse the demand for real money balances in the United States for the period 1990Q1–2017Q2 using a novel Divisia monetary aggregate developed by Barnett et al. (2013). Unlike simple-sum aggregates, Divisia aggregates take into account the different degrees of ‘moneyness’ of each monetary asset. In addition, Divisia aggregates have shown to be empirically superior to simple-sum aggregates, providing stable money demand functions for different periods and countries. In a first stage, we test for cointegration and estimate a long-run equilibrium model. In a second stage, we estimate an error correction model to study the short-run dynamics. Consistent with previous research, our findings show the existence of a stable money demand function, which suggests that monetary aggregates, when properly measured, can be useful tools in the conduct of monetary policy.[Continue reading: AEL]
    • Book chapters

      • Why the world needs more immigration

        In his classic work, The Myth of the Rational Voter, Bryan Caplan identifies four systematic biases about economics held by the average citizen: make-work bias (an  inclination to overestimate the disadvantages of temporary job destruction due to productivity increases), anti-market bias (a tendency to overlook the benefits of the market as a coordination mechanism), pessimistic bias (an inclination to underestimate the present and future performance of the economy), and anti-foreign bias (a tendency to underestimate the economic benefits of interaction with foreigners)[Continue reading: Migration & Immigration]
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