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U.S. Domestic Money, Inflation and Output

Author

Listed:
  • Yunus Aksoy

    (Department of Economics, Mathematics & Statistics, Birkbeck)

  • Tomasz Piskorski

Abstract

Recent empirical research documents that the strong short-term relationship between U.S. monetary aggregates on one side and inflation and real output on the other has mostly disappeared since the early 1980s. Using the direct estimate of flows of USD abroad we find that domestic money (currency corrected for the foreign holdings of dollars) contains valuable information about future movements of U.S. inflation and real output. Statistical evidence suggests that the Friedman-Schwartz stylized facts can be reestablished once the focus of analysis is back on the correct measure of domestic monetary aggregates.

Suggested Citation

  • Yunus Aksoy & Tomasz Piskorski, 2005. "U.S. Domestic Money, Inflation and Output," Birkbeck Working Papers in Economics and Finance 0506, Birkbeck, Department of Economics, Mathematics & Statistics.
    • Handle: RePEc:bbk:bbkefp:0506
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    File URL: https://eprints.bbk.ac.uk/id/eprint/27033
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    References listed on IDEAS

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    More about this item

    Keywords

    foreign holdings; domestic money; monetary aggregates; information value;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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