Financial market participation and money demand

This thesis combines cross-sectional and time series evidence, in order to analyze financial market participation and provide a better understanding of money demand. I propose a unified approach to the study of money demand by analyzing the behavior of time series of assets yielding monetary services and considering the causes and effects of changes in extensive margins on the evolution of these assets.; I first present how financial market participation has changed during the post-war period, and report a significant increase in participation during the 1960s and 1970s. Then I analyze the increase in participation in non-monetary assets, and the determinants of this evolution. I confirm an earlier finding that financial wealth is an important factor in the decision to participate in the financial market, and quantify its influence on the increase in participation. Finally, I address the issue of the stability of money demand by considering the behavior of time series of monetary assets and the effects of changes in extensive margins on aggregate money demand.