IDEAS home Printed from https://ideas.repec.org/p/fth/pensta/7-93-2.html
   My bibliography  Save this paper

Money, Output and Real Business Cycles in a Small, Open Economy

Author

Listed:
  • Ahmed, S.
  • Murthy, R.

Abstract

This paper examines some key propositions of real business cycle theory using a small open-economy framework and a structural vector autoregressive methodology. Identification is achieved by long-run restrictions. The main results from the Canadian economy are that domestic supply shocks are important in explaining short-run fluctuations in output, while real interest rate and terms-of-trade changes are not; an important source of the money-output correlation is output shocks affecting inside money in the short run; and the presence of a causal influence of high-powered money or demand deposits on output is not strongly supported by the data. This paper examines some key propositions of real business cycle theory using a small open-economy framework and a structural VAR methodology. Identification is achieved by long-run restrictions. The main results from the Canadian economy are (i) domestic supply shocks are important in explaining short-run fluctuations in output, while real interest rate and terms of trade changes are not; (ii) an important source of the money-output correlation is output shocks affecting inside money in the short run; and (iii) the presence of a causal influence of high-powered money or demand deposits on output is not strongly supported by the data.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Ahmed, S. & Murthy, R., 1993. "Money, Output and Real Business Cycles in a Small, Open Economy," Papers 7-93-2, Pennsylvania State - Department of Economics.
  • Handle: RePEc:fth:pensta:7-93-2
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    Citations

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


    Cited by:

    1. Le, Ha, 2014. "Dynamics of Business Cycles in Vietnam: A comparison with Indonesia and Philippines," MPRA Paper 57010, University Library of Munich, Germany, revised 01 Jul 2014.
    2. Paul Castillo Bardález & Jorge Salas, 2010. "Los términos de intercambio como impulsores de fluctuaciones económicas en economías en desarrollo: estudio empírico," Premio de Banca Central Rodrigo Gómez / Central Banking Award "Rodrigo Gómez", Centro de Estudios Monetarios Latinoamericanos, CEMLA, number prg2010, July-Dece.
    3. Le Thanh Ha, 2015. "Dynamics of Business Cycles in Vietnam a Comparison with Indonesia and Philippines," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 2(1), pages 23-38.
    4. P N Snowden & M A Salisu & N Taher, 2000. "Oiling the wheels: credit and monetary neutrality in Saudi Arabia," Working Papers 539748, Lancaster University Management School, Economics Department.
    5. Wilson, Matthew S., 2020. "A real business cycle model with money as a sunspot variable," Journal of Economics and Business, Elsevier, vol. 109(C).
    6. Paul Castillo Bardález & Jorge Salas, 2010. "The Terms of Trade as Drivers of Economic Fluctuations in Developing Economies: An Empirical Study," Premio de Banca Central Rodrigo Gómez / Central Banking Award "Rodrigo Gómez", Centro de Estudios Monetarios Latinoamericanos, CEMLA, number prg2010eng, July-Dece.
    7. Thomas Lubik & Wing Teo, 2005. "Do World Shocks Drive Domestic Business Cycles? Some Evidence from Structural Estimation," Economics Working Paper Archive 522, The Johns Hopkins University,Department of Economics.
    8. Chang, Koying & Filer, Larry & Ying, Yung-Hsiang, 2002. "A structural decomposition of business cycles in Taiwan," China Economic Review, Elsevier, vol. 13(1), pages 53-64.
    9. Thomas Lubik & Wing Leong Teo, 2005. "Do Terms of Trade Shocks Drive Business Cycles? Some Evidence from Structural Estimation," Computing in Economics and Finance 2005 377, Society for Computational Economics.
    10. Gabriel Rodríguez & Pierina Villanueva Vega & Paul Castillo Bardalez, 2018. "Driving economic fluctuations in Peru: the role of the terms of trade," Empirical Economics, Springer, vol. 55(3), pages 1089-1119, November.

    More about this item

    Keywords

    business cycles ; money ; demand;

    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:fth:pensta:7-93-2. 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: (Thomas Krichel). General contact details of provider: http://edirc.repec.org/data/depsuus.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.