Monetary Aggregates and the Business Cycle

Roman Sustek

MPRA Paper from University Library of Munich, Germany

Abstract: In the U.S. business cycle, a monetary aggregate consisting predominantly of sight deposits strongly leads output, time deposits strongly lag output, and a monetary aggregate consisting of both types of deposits tends to be coincident with the cycle. Such movements are observed both before and after the 1979 monetary policy change. Similar dynamics are obtained in a model with multi-stage production and purchase-size heterogeneity when agents optimally choose their mix of cash, checkable, and time deposits used in transactions. The causality in the model runs from real activity to money, rather than the other way around.

Keywords: Monetary aggregates; business cycle; general equilibrium (search for similar items in EconPapers)
JEL-codes: E32 E41 E51 (search for similar items in EconPapers)
Date: 2009-09-02
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac and nep-mon
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Related works:
Journal Article: Monetary aggregates and the business cycle (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:17202

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