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Instability: Monetary and Real

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  • Michael T. Belongia

    (University of Mississippi)

  • Peter N. Ireland

    ()
    (Boston College)

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.

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Bibliographic Info

Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 830.

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Date of creation: 01 Aug 2013
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Handle: RePEc:boc:bocoec:830

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Keywords: money; output; Divisia aggregates; structural VAR;

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Cited by:
  1. William Barnett, 2013. "Friedman and Divisia Monetary Measures," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 201312, University of Kansas, Department of Economics, revised Dec 2013.

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