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- Title
THE USELESSNESS OF TRANSACTION DEMAND MODELS: COMMENT.
- Authors
SPRENKLE, CASE M.
- Abstract
The article discusses comments made by Daniel Orr concerning an earlier paper by the author about the demand for money by large firms. Orr indicated that cash balances for a firm could be predicted by using models of the Miller-Orr variety. The author replies that this is not accurate. Miller-Orr models assume cash has a normal transactions cost function, which is not true in practice. In addition, the model Orr presented considers average cash balances instead of the more appropriate end-of-day balance, and does not correctly account for the variance in daily cash flows.
- Subjects
DEMAND for money; CORPORATE finance; ECONOMIC demand; COMPENSATORY balances; CASH management; CASH flow
- Publication
Journal of Finance (Wiley-Blackwell), 1977, Vol 32, Issue 1, p227
- ISSN
0022-1082
- Publication type
Article
- DOI
10.1111/j.1540-6261.1977.tb03262.x