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Long Run Effects of Money on Real Consumption and Investment in the U.S

Author

Listed:
  • Gary L. Shelley

    (East Tennesee State University)

  • Frederick H. Wallace

    (Universidad de Quintana Roo)

Abstract

This paper tests for long run effects of money on real expenditures in the U.S. over the 1959-2002 period. Real consumption and investment expenditures, as well as their broadly defined components, are examined. We also test for effects of money on long run reallocations of consumption expenditures among durables, nondurables, and services. The time series characteristics of each variable are rigorously investigated. This is followed by application of the long run neutrality test, introduced by Fisher and Seater (1993), to each real expenditures series. Results support long run neutrality of both M2 and M3 with respect to real expenditures for all examined levels of data aggregation.

Suggested Citation

  • Gary L. Shelley & Frederick H. Wallace, 2004. "Long Run Effects of Money on Real Consumption and Investment in the U.S," Macroeconomics 0404007, University Library of Munich, Germany, revised 06 Apr 2004.
    • Handle: RePEc:wpa:wuwpma:0404007
    Note: Type of Document - pdf; pages: 29
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    More about this item

    Keywords

    money; neutrality; consumption; investment;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)

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