U.S. Domestic Money, Inflation and Output

Yunus Aksoy and Tomasz Piskorski

No 506, Birkbeck Working Papers in Economics and Finance from Birkbeck, Department of Economics, Mathematics & Statistics

Abstract: Recent empirical research documents that the strong short-term relationship between U.S. monetary aggregates on one side and inflation and real output on the other has mostly disappeared since the early 1980s. Using the direct estimate of flows of USD abroad we find that domestic money (currency corrected for the foreign holdings of dollars) contains valuable information about future movements of U.S. inflation and real output. Statistical evidence suggests that the Friedman-Schwartz stylized facts can be reestablished once the focus of analysis is back on the correct measure of domestic monetary aggregates.

Keywords: foreign holdings; domestic money; monetary aggregates; information value (search for similar items in EconPapers)
JEL-codes: E3 E4 E5 (search for similar items in EconPapers)
Date: 2005-02
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Citations: View citations in EconPapers (4)

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https://eprints.bbk.ac.uk/id/eprint/27033 First version, 2005 (application/pdf)

Related works:
Journal Article: U.S. domestic money, inflation and output (2006)
Working Paper: U.S. Domestic Money, Inflation and Output (2004)
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