An Estimation of the Quantity of Money for Transaction

Fisher equation is an essential tool for money-quantity related researches,in which the termmoney quantityis generally regarded as money stock.Recognizing that money demand includes transaction,precautionary, and speculative demand,as Keynes claimed,it is not proper to take aggregate demand for money as the transaction demand.The method for detecting the quantity of transaction demand for money is proposed,based on the recognition of the transaction velocity.It is found that the quantity of money for transaction is much smaller than money stock,which can to some extent explain why monetary policies in often ineffective for curbing inflation in the shout run.