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Comment: The Demand for Liquid Asset Balances by U.S. Manufacturing Corporations: 1959–1970

Published online by Cambridge University Press:  19 October 2009

Cherukuri U. Rao
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Extract

The paper presented by Professors Marcis and Smith (M-S), analyzing the determinants of the demand for cash and short-term Treasury obligations held by U. S. manufacturing corporations, is praiseworthy. The authors have made an interesting application of a seemingly unrelated regression (SUR) technique developed by Arnold Zellner [3] in estimating demand functions jointly for each of the liquid assets of corporations belonging to nine asset size categories. Nonetheless, I have some reservations about the implications of the model employed in their present study and the reliability of their results. Some of my reservations concern the theoretical foundation of their model itself, while others are related to their methodology and estimation techniques.

Type
Discussants
Information
Journal of Financial and Quantitative Analysis , Volume 8 , Issue 2 , March 1973 , pp. 223 - 225
Copyright
Copyright © School of Business Administration, University of Washington 1973

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References

[1]Friedman, Milton. “The Demand for Money: Some Theoretical and Empirical Results.” Journal of Political Economy (August 1959).CrossRefGoogle Scholar
[2]Nadiri, N. I. “The Determinants of Real Cash Balances in the U. S. Total Manufacturing Sector.” Quarterly Journal of Economics (May 1969).CrossRefGoogle Scholar
[3]Zellner, A. “An Efficient Method of Estimating Seemingly Unrelated Regressions and Tests for Aggregation Bias.” Journal of the American Statistical Association (June 1962).CrossRefGoogle Scholar