Publication: Journal of Economic Education
Volume: Volume 35, No. 3
Issue: Summer 2004
Pages: 243-250
Author(s): Bradley T. Ewing (Baylor University), Jamie B. Kruse (Texas Tech University), Mark A. Thompson (Stephen F. Austin State University)
Address (Principal Author):Bradley T. Ewing
Associate Professor of Economics
Hankamer School of Business
Baylor University
Waco, TX 76798
Phone: (254) 710-3729
Fax: (254) 710-6142
Internet Address (Principal Author): bradley.ewing@baylor.edu
Title: Money Demand and Risk: A Classroom Experiment
Abstract: In this experiment, students are endowed with an income stream that they allocate between risk-free and risky funds. When volatility of the risky fund increases, reallocating to the risk-free fund results in an increase in aggregate money demand. By observing the aggregate response of their cohort, students gain a better understanding of the concept of money demand, portfolio allocation, and risk.