Monetary Aggregates and Output
- (pp. 1125-1135)
AbstractWe 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.
Citation2000. "Monetary Aggregates and Output." American Economic Review, 90(5): 1125-1135. DOI: 10.1257/aer.90.5.1125
- E32 Business Fluctuations; Cycles
- E51 Money Supply; Credit; Money Multipliers