IDEAS home Printed from https://ideas.repec.org/a/ier/iecrev/v32y1991i3p645-67.html
   My bibliography  Save this article

Inside Money, Output, and Causality

Author

Listed:
  • Freeman, Scott
  • Huffman, Gregory W

Abstract

The authors present an explicit general equilibrium model consistent with these observations: (1) innovations in the nominal money stock are positively correlated with and precede (" Granger-cause") innovations in output; (2) these innovations in the nominal money stock represent innovations in inside, not outside, money; and (3) when interest rates are included in vector autoregressions, their innovations, not money's, are seen to precede output. Changes in the money stock represent an endogenous reaction to some third factor and do not cause subsequent changes in output. Therefore, a change in the current fiat money stock will not lead to any change in output. Copyright 1991 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Freeman, Scott & Huffman, Gregory W, 1991. "Inside Money, Output, and Causality," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 645-667, August.
  • Handle: RePEc:ier:iecrev:v:32:y:1991:i:3:p:645-67
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0020-6598%28199108%2932%3A3%3C645%3AIMOAC%3E2.0.CO%3B2-1&origin=repec
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ireland, Peter N., 2003. "Endogenous money or sticky prices?," Journal of Monetary Economics, Elsevier, vol. 50(8), pages 1623-1648, November.
    2. repec:eee:finsta:v:33:y:2017:i:c:p:133-149 is not listed on IDEAS
    3. Joseph H. Haslag, 1997. "Output, growth, welfare, and inflation: a survey," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q II, pages 11-21.
    4. Powers, Dennis, 2005. "Inside money and the effects of inflation," Journal of Macroeconomics, Elsevier, vol. 27(3), pages 494-516, September.
    5. Finn E. Kydland & Scott Freeman, 2000. "Monetary Aggregates and Output," American Economic Review, American Economic Association, vol. 90(5), pages 1125-1135, December.
    6. Jha, Raghbendra & Prasad Rath, Deba, 2001. "On the Endogeneity of the Money Multiplier in India," Departmental Working Papers 2001-01, The Australian National University, Arndt-Corden Department of Economics.
    7. Cuberes, David & Dougan, William, 2009. "How Endogenous Is Money? Evidence from a New Microeconomic Estimate," MPRA Paper 17744, University Library of Munich, Germany.
    8. Greenwood, Jeremy & Williamson, Stephen D., 1989. "International financial intermediation and aggregate fluctuations under alternative exchange rate regimes," Journal of Monetary Economics, Elsevier, vol. 23(3), pages 401-431, May.
    9. Lars Boerner & Albrecht Ritschl, 2010. "Communal Responsibility and the Coexistence of Money and Credit Under Anonymous Matching," CEP Discussion Papers dp1034, Centre for Economic Performance, LSE.
    10. Peter Ireland, 2005. "EconomicDynamics Interviews Peter Ireland on Money and the Business Cycle," EconomicDynamics Newsletter, Review of Economic Dynamics, vol. 7(1), November.
    11. Mei Dong, 2009. "Money and Costly Credit," 2009 Meeting Papers 404, Society for Economic Dynamics.
    12. Burton Abrams & Russell Settle, 2005. "Is Money Neutral in the Long Run?," Working Papers 05-04, University of Delaware, Department of Economics.
    13. Reed, Robert R. & Ghossoub, Edgar A., 2012. "The effects of monetary policy at different stages of economic development," Economics Letters, Elsevier, vol. 117(1), pages 138-141.
    14. Gauger, Jean, 1998. "Economic Impacts on the Money Supply Process," Journal of Macroeconomics, Elsevier, vol. 20(3), pages 553-577, July.
    15. Robert R. Reed & Edgar A. Ghossoub, 2013. "Thresholds and the Welfare Cost of Inflation," Working Papers 0186eco, College of Business, University of Texas at San Antonio.
    16. Sustek, Roman, 2010. "Monetary aggregates and the business cycle," Journal of Monetary Economics, Elsevier, vol. 57(4), pages 451-465, May.
    17. repec:rjr:romjef:v::y:2018:i:2:p:63-79 is not listed on IDEAS
    18. Joseph H. Haslag & Scott E. Hein, 1995. "Measuring the policy effects of changes in reserve requirement ratios," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q III, pages 2-15.
    19. Finn, Mary G., 1999. "An equilibrium theory of nominal and real exchange rate comovement," Journal of Monetary Economics, Elsevier, vol. 44(3), pages 453-475, December.
    20. Joseph H. Haslag, 1995. "Inflation and intermediation in a model with endogenous growth," Working Papers 9502, Federal Reserve Bank of Dallas.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ier:iecrev:v:32:y:1991:i:3:p:645-67. 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: (Wiley-Blackwell Digital Licensing) or (). General contact details of provider: http://edirc.repec.org/data/deupaus.html .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.