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Does Money Matter? An Empirical Investigation


  • Huston, Barry

    (Department of Economics Marquette University)

  • McGibany, James M

    (Department of Economics Marquette University)

  • Nourzad, Farrokh

    () (Department of Economics Marquette University)


This paper uses a simultaneous-equations model of the new consensus macroeconomic model to examine whether the inclusion of the money stock in the aggregate demand function improves the statistical fit of the model. The results indicate that the consensus model is accurate for the U.S. in that the inclusion of money does not increase the predictive power of the model. However, the results reveal that the estimated coefficients are more robust when money is included as an instrumental variable in the simultaneous equations consensus model.

Suggested Citation

  • Huston, Barry & McGibany, James M & Nourzad, Farrokh, 2010. "Does Money Matter? An Empirical Investigation," Working Papers and Research 2010-09, Marquette University, Center for Global and Economic Studies and Department of Economics.
  • Handle: RePEc:mrq:wpaper:2010-09

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    References listed on IDEAS

    1. Don Ross & Carla Sharp & Rudy E. Vuchinich & David Spurrett, 2008. "Midbrain Mutiny: The Picoeconomics and Neuroeconomics of Disordered Gambling: Economic Theory and Cognitive Science," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262182653, January.
    2. Don Ross, 2007. "Economic Theory and Cognitive Science: Microexplanation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262681684, January.
    3. Ross, Don, 2008. "Two Styles Of Neuroeconomics," Economics and Philosophy, Cambridge University Press, vol. 24(03), pages 473-483, November.
    4. Davis, John B., 2007. "Economic Theory and Cognitive Science, by Don Ross. MIT Press, 2005, 384 pages," Economics and Philosophy, Cambridge University Press, vol. 23(02), pages 245-252, July.
    5. Paul William Glimcher & Kenway Louie & Joseph Kable, 2007. "Neuroeconomic Studies of Impulsivity: Now or Just as Soon as Possible?," American Economic Review, American Economic Association, vol. 97(2), pages 142-147, May.
    6. Camerer, Colin F., 2008. "The Potential Of Neuroeconomics," Economics and Philosophy, Cambridge University Press, vol. 24(03), pages 369-379, November.
    7. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    8. Wilcox, Nathaniel T., 2008. "Against Simplicity And Cognitive Individualism," Economics and Philosophy, Cambridge University Press, vol. 24(03), pages 523-532, November.
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    More about this item


    consensus macro model; monetary policy; Phillips Curve; Taylor Rule; Economics;

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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