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Finding The Rigth Nominal Anchor: The Cointegration Of Money, Credit And Nominal Income In Norway

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  • BARDSEN, G.
  • KLOVLAND, J.T.

Abstract

Using cointegration techniques this paper presents an empirical analysis of the relationship between nominal GDP or domestic expenditure on the one hand and money and credit variables on the other. The main findings are: (1) In the period from 1966 to 1983 there is a relatively firm relationship between the nominal income variables and credit, which subsequentl breaks down completely during the ensuing period of credit market deregulation; (2~ Nominal income and the broad money stock, M2, are cointegrated throughout the period 1966 to 1989 within a model augmented by the own rate of interest on M2 and a bond yield. Thus M2, adjusted for the effects of interest rates affecting the demand for money, seems to provide the most reliable long—run anchor for nominal income in Norway in the period considered here.
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  • Bardsen, G. & Klovland, J.T., 1990. "Finding The Rigth Nominal Anchor: The Cointegration Of Money, Credit And Nominal Income In Norway," The Warwick Economics Research Paper Series (TWERPS) 350, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:350
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    Cited by:

    1. Podivinsky, Jan M., 1992. "Small sample properties of tests of linear restrictions on cointegrating vectors and their weights," Economics Letters, Elsevier, vol. 39(1), pages 13-18, May.
    2. Bardsen, Gunnar, "undated". "Dynamic Modelling And The Demand For Narrow Money In Norway," Economic Research Papers 268479, University of Warwick - Department of Economics.
    3. Podivinsky, Jan M., 1998. "Testing misspecified cointegrating relationships," Economics Letters, Elsevier, vol. 60(1), pages 1-9, July.

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