Instability: Monetary and Real

Michael Belongia and Peter Ireland

No 830, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: Fifty years ago, Friedman and Schwartz presented evidence of pro-cyclical movements in the money stock, exhibiting a lead over corresponding movements in output, found in historical monetary statistics for the United States. Very similar relationships appear in more recent data. To see them clearly, however, one must use Divisia monetary aggregates in place of the Federal Reserve’s official, simple-sum measures. One must also split the data sample to focus, separately, on episodes before and after 1984 and on a new episode of instability beginning in 2000. A structural VAR draws tight links between Divisia money and output during each of these three periods.

Keywords: money; output; Divisia aggregates; structural VAR (search for similar items in EconPapers)
JEL-codes: E31 E32 E51 E52 (search for similar items in EconPapers)
Date: 2013-08-01
New Economics Papers: this item is included in nep-cba, nep-his, nep-mac and nep-mon
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Citations: View citations in EconPapers (6)

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