Domestic money and US output and inflation

  • Recent empirical research found that the strong short-term relationship between monetary aggregates and US real output and inflation, as outlined in the classical study by M. Friedman and Schwartz, mostly disappeared since the early 1980s. In the light of the B. Friedman and Kuttner (1992) information value approach, we reevaluate the vanishing relationship between US monetary aggregates and these macroeconomic fundamentals by taking into account the international currency feature of the US dollar. In practice, by using official US data for foreign flows constructed by Porter and Judson (1996) we find that domestic money (currency component of M1 corrected for the foreign holdings of dollars) contains valuable information about future movements of US real output and inflation. Statistical evidence here provided thus suggests that the Friedman and Schwartz's stylized facts can be reestablished once the focus of analysis is back on the domestic monetary aggregates. This Version: August, 2001. Klassifikation: E3, E4, E5

Download full text files

Export metadata

Additional Services

Share in Twitter Search Google Scholar
Author:Yunus Aksoy, Tomasz Piskorski
Parent Title (German):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2001,08
Series (Serial Number):CFS working paper series (2001, 08)
Document Type:Working Paper
Year of Completion:2001
Year of first Publication:2001
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2005/06/13
Tag:Foreign holdings; Friedman-Schwartz's evidence; Information value; US monetary aggregates
GND Keyword:USA; Geldangebot; Zentralbankgeld; Geldmenge; Konjunktur; Inflation; Schätzung; Geschichte 1966-1998
Issue:Version: August 2001
Page Number:49
Source:CFS working paper ; 2001,08
Institutes:Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht