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

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Author Info

  • 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.

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File URL: http://128.118.178.162/eps/mac/papers/0404/0404007.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Macroeconomics with number 0404007.

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Length: 29 pages
Date of creation: 06 Apr 2004
Date of revision: 06 Apr 2004
Handle: RePEc:wpa:wuwpma:0404007

Note: Type of Document - pdf; pages: 29
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Web page: http://128.118.178.162

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Keywords: money; neutrality; consumption; investment;

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  3. Gary L. Shelley & Frederick H. Wallace, 2004. "Testing for Long Run Neutrality of Money in Mexico," Macroeconomics 0402003, EconWPA.
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  16. Garrett, Thomas A., 2003. "Aggregated versus disaggregated data in regression analysis: implications for inference," Economics Letters, Elsevier, vol. 81(1), pages 61-65, October.
  17. James Bullard, 1999. "Testing long-run monetary neutrality propositions: lessons from the recent research," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 57-77.
  18. Spencer Dale & Andrew Haldane, 1993. "Interest rates and the channels of monetary transmission: some sectoral estimates," Bank of England working papers 18, Bank of England.
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