A STRUCTURAL MODEL OF THE CANADIAN MONETARY SECTOR.

The purpose of this paper is to adapt the Teigen model to the Canadian economy and to test the modified form for the post-World War II experience. Toward this end, Part II will develop the Teigen model as modified for Canada, while Part III tests the model with quarterly observations for the period 19471-1968IV. Part IV will analyze the Friedman demand for money hypothesis in terms of our structural estimates and compare demand elasticities from this model with those found by other investigators. Finally, Part V will provide a summary and conclusions.
The results of the various models evaluated suggest several interesting and important considerations. The first concerns the demand for money in Canada. These estimates indicate the existence, as expected, of an important lagged response on the transaction demand side of the monetary sector and suggest that the best specification of the demand function is logarithmic rather than linear. [ABSTRACT FROM AUTHOR]