On the Empirics of the Non-neutrality of Money: Evidence from Developed Countries
The paper examines the cyclical behavior of money and prices in a sample of developed countries dating from 1951 to 1990. Evident in the data is a tendency toward an average countercyclical behavior of the price level and a weakly procyclical behavior of nominal monetary aggregates. For money (M1) and money plus quasi-money (M2), correlation coefficients between the real per capita output growth rate and the half lag in the money growth rate are higher on average than correlation coefficients between the real per capita output growth rate and the half lead in the money growth rate, thus indicating that money changes precede output changes. There is at least some evidence that M2 is more strongly associated with real output M1 or high-powered money (M0). As opposed to developed countries, high-inflation Latin American countries exhibit a countercyclical behavior of money.
Volume (Year): 55 (2005)
Issue (Month): 5-6 (May)
|Contact details of provider:|| Postal: Opletalova 26, CZ-110 00 Prague|
Phone: +420 2 222112330
Fax: +420 2 22112304
Web page: http://ies.fsv.cuni.cz/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kormendi, Roger C & Meguire, Philip G, 1984. "Cross-Regime Evidence of Macroeconomic Rationality," Journal of Political Economy, University of Chicago Press, vol. 92(5), pages 875-908, October.
- Eswar S Prasad & Bankim Chadha, 1992. "Are Prices Countercyclical?," IMF Working Papers 92/88, .
- King, Robert G & Plosser, Charles I, 1984. "Money, Credit, and Prices in a Real Business Cycle," American Economic Review, American Economic Association, vol. 74(3), pages 363-380, June.
- Lucas, Robert Jr., 1972. "Expectations and the neutrality of money," Journal of Economic Theory, Elsevier, vol. 4(2), pages 103-124, April.
- David K. Backus & Patrick J. Kehoe, 1991.
"International evidence on the historical properties of business cycles,"
145, Federal Reserve Bank of Minneapolis.
- Backus, David K & Kehoe, Patrick J, 1992. "International Evidence of the Historical Properties of Business Cycles," American Economic Review, American Economic Association, vol. 82(4), pages 864-888, September.
- David K. Backus & Patrick J. Kehoe, 1992. "International Evidence on the Historical Properties of Business Cycles," Working Papers 92-5, New York University, Leonard N. Stern School of Business, Department of Economics.
- James Tobin, 1970.
"Money and Income: Post Hoc Ergo Propter Hoc?,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 84(2), pages 301-317.
- Lucas, Robert E, Jr, 1973. "Some International Evidence on Output-Inflation Tradeoffs," American Economic Review, American Economic Association, vol. 63(3), pages 326-334, June.
- Milton Friedman, 1961. "The Lag in Effect of Monetary Policy," Journal of Political Economy, University of Chicago Press, vol. 69, pages 447-447.
- Robert Summers & Alan Heston, 1991. "The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950–1988," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 327-368.
- Barro, Robert J., 1976. "Rational expectations and the role of monetary policy," Journal of Monetary Economics, Elsevier, vol. 2(1), pages 1-32, January.
- Smith, R Todd, 1992. "The Cyclical Behavior of Prices," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 24(4), pages 413-430, November.
- Wogin, Gillian, 1980. "Unemployment and monetary policy under rational expectations : Some Canadian evidence," Journal of Monetary Economics, Elsevier, vol. 6(1), pages 59-68, January.
- Fischer, Stanley, 1979. "Anticipations and the Nonneutrality of Money," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 225-252, April.
When requesting a correction, please mention this item's handle: RePEc:fau:fauart:v:55:y:2005:i:5-6:p:267-282. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lenka Herrmannova)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.