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Money's Role in the Monetary Business Cycle

  • Peter N. Ireland

A small, structural model of the monetary business cycle implies that real money balances enter into a correctly-specified, forward-looking IS curve if and only if they enter into a correctly-specified, forward-looking Phillips curve. The model also implies that empirical measures of real balances must be adjusted for shifts in money demand to accurately isolate and quantify the dynamic effects of money on output and inflation. Maximum likelihood estimates of the model's parameters take both of these considerations into account, but still suggest that money plays a minimal role in the monetary business cycle.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8115.

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Date of creation: Feb 2001
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Publication status: published as Ireland, Peter N. "Money's Role In The Monetary Business Cycle," "Journal of Money, Credit and Banking, 2004, v36(6,Dec), 969-983.
Handle: RePEc:nbr:nberwo:8115
Note: ME
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