Money Stock Targetting and Money Supply: A Closer Examination of the Data
AbstractIn a recent paper Mercenier and Sekkat (1988) use a linear-quadratic model to examine the willingness of a monetary authority in a small open economy to target its exchange rate. Based on their empirical results, the authors conclude that the Bank of Canada has displayed a willingness to use the money supply to target the Canada-U.S. exchange rate. We re-examine their empirical results using a different estimation approach and with different assumptions about the forcing process of the exogenous variables. We also extend the sample period to include more recent observations. While we find some weak evidence to support their conclusion, the results, in general, suggest that a linear-quadratic model may not be a particularly useful representation of the assumed exchange rate targeting by a monetary authority. Copyright 1996 by John Wiley & Sons, Ltd.
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Bibliographic InfoPaper provided by University of Waterloo, Department of Economics in its series Working Papers with number 9318.
Length: 20 pages
Date of creation: 1993
Date of revision:
money ; money supply ; data analysis;
Other versions of this item:
- Amano, Robert A & Wirjanto, Tony S, 1996. "Money Stock Targeting and Money Supply: A Closer Examination of the Data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(1), pages 93-104, Jan.-Feb..
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- Edward Nelson, 2005.
"Monetary Policy Neglect and the Great Inflation in Canada, Australia, and New Zealand,"
International Journal of Central Banking,
International Journal of Central Banking, vol. 1(1), May.
- Edward Nelson, 2004. "Monetary policy neglect and the Great Inflation in Canada, Australia, and New Zealand," Working Papers 2004-008, Federal Reserve Bank of St. Louis.
- Nelson, Edward, 2005. "Monetary Policy Neglect and the Great Inflation in Canada, Australia, and New Zealand," MPRA Paper 822, University Library of Munich, Germany.
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