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Re-Examining the Stability of Money Multiplier for the US: The Nonlinear ARDL Model

Author

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  • Ismet Gocer

    (Aydin Adnan Menderes University, Turkey)

  • Serdar Ongar

    (St. Mary's College of Maryland, St. Mary's City, MD, USA)

Abstract

The risinguncertainties in the economy and the entwined global financial markets can easily cause nonlinear (asymmetric) behaviors among economic actors. Accordingly, this study re-considers the stability of the money multiplier from a different methodological perspective from that of prior studies, which assumed a linear relationship between money supply and monetary base. To this aim, the nonlinear ARDL model is applied for the US for the 2000M1-2018M9 period. Empirical findings of the nonlinear model indicate that only increases in positive monetary base shocks have a proportional relation with money supply. Additionally, the nonlinear ARDL detects proportional relationships between money supply and monetary base lower degree than the linear model

Suggested Citation

  • Ismet Gocer & Serdar Ongar, 2020. "Re-Examining the Stability of Money Multiplier for the US: The Nonlinear ARDL Model," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 18(1), pages 101-113.
    • Handle: RePEc:seb:journl:v:18:y:2020:i:1:p:101-113
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    References listed on IDEAS

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    More about this item

    Keywords

    Money Multiplier; Asymmetry; Linear and Nonlinear ARDL;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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