Money and Output: Friedman and Schwartz Revisited

Belongia, Michael; Ireland, Peter

Money and Output: Friedman and Schwartz Revisited

No 21796, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: More than fifty years ago, Friedman and Schwartz examined historical data for the United States and found evidence of pro-cyclical movements in the money stock, which led corresponding movements in output. We find similar correlations in more recent data; these appear most clearly when Divisia monetary aggregates are used in place of the Federal Reserve’s official, simple-sum measures. When we use information in Divisia money to estimate a structural vector autoregression, identified monetary policy shocks appear to have large and persistent effects on output and prices, with a lag that has lengthened considerably since the early 1980s.

JEL-codes: E31 E32 E51 E52 (search for similar items in EconPapers)
Date: 2015-12
New Economics Papers: this item is included in nep-his, nep-mac and nep-mon
Note: ME
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Citations: View citations in EconPapers (11)

Published as MICHAEL T. BELONGIA & PETER N. IRELAND, 2016. "Money and Output: Friedman and Schwartz Revisited," Journal of Money, Credit and Banking, vol 48(6), pages 1223-1266.

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