Inflation, Money Demand, and Portfolio Choice

The authors thank the Central Bank of Cyprus, the Bank of England, and the European Central Bank for hospitality when this paper was written. This paper was prepared by the authors under the Wim Duisenberg Research Fellowship Program sponsored by the European Central Bank (ECB). Any views expressed are only those of the authors and do not necessarily represent the views of the ECB or the Eurosystem. For helpful comments, the authors thank the editor, three referees, Geert Bekaert, Alexander Bick (discussant), Josef Bonaparte, John Campbell, Joao Cocco, Russell Cooper, Pierre Collin-Dufresne, Eric French, Francisco Gomes, Luigi Guiso, Michael Haliassos, Tullio Japelli, George Korniotis, Alok Kumar, Valentina Michelangeli (discussant), and Carolin Pflueger as well as seminar participants at the ECB, the European Conference on Household Finance, the European Economic Association, the European Financial Management Association, Imperial College London, Queen Mary, the Riksbank, the Royal Economic Society, the Society for Economic Dynamics, Stockholm School of Economics, the University of Miami, the University of Warwick, and the University of Zurich. The authors are responsible for any remaining errors.