Re-Examining the Stability of Money Multiplier for the US: The Nonlinear ARDL Model

Ismet Gocer and Serdar Ongar
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Serdar Ongar: St. Mary's College of Maryland, St. Mary's City, MD, USA

South-Eastern Europe Journal of Economics, 2020, vol. 18, issue 1, 101-113

Abstract: The risinguncertainties in the economy and the entwined global financial markets can easily cause nonlinear (asymmetric) behaviors among economic actors. Accordingly, this study re-considers the stability of the money multiplier from a different methodological perspective from that of prior studies, which assumed a linear relationship between money supply and monetary base. To this aim, the nonlinear ARDL model is applied for the US for the 2000M1-2018M9 period. Empirical findings of the nonlinear model indicate that only increases in positive monetary base shocks have a proportional relation with money supply. Additionally, the nonlinear ARDL detects proportional relationships between money supply and monetary base lower degree than the linear model

Keywords: Money Multiplier; Asymmetry; Linear and Nonlinear ARDL (search for similar items in EconPapers)
JEL-codes: E51 E52 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:seb:journl:v:18:y:2020:i:1:p:101-113

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