Monetary Aggregates and Output
Freeman, Scott, and
Finn E. Kydland. 2000. "Monetary Aggregates and Output."
American Economic Review,
We ask whether the following observations may result from endogenously determined fluctuations in the money multiplier rather than a causal influence of money on output: (i) M1 is positively correlated with real output; (ii) the money multiplier and deposit-to-currency ratio are positively correlated with output; (iii) the price level is negatively correlated with output; (iv) the correlation of M1 with contemporaneous prices is substantially weaker than the correlation of M1 with real output; (v) correlations among real variables are essentially unchanged under different monetary-policy regimes; and (vi) real money balances are smoother than money-demand equations would predict.
Article Full-Text Access
Freeman, Scott (U TX)
Kydland, Finn E. (Carnegie Mellon U)
E32: Business Fluctuations; Cycles
E51: Money Supply; Credit; Money Multipliers