Friedman and Schwartz (1982) and Goodhart (1982) report a zero correlation between money growth and output growth in U.K. historical data. This finding is puzzling, as there is wide agreement that changes in monetary policy are frequently nonneutral in the short run and that the U.K. experience,...

In this study, we compare simple sum and Divisia monetary aggregates under a Taylor rule formation for the U.S. economy to figure out if there exists any improvement in the estimation of inflation and output when a theoretically convincing definition of money i.e., Divisia money, is utilized....

According to Monetarist Milton Friedman (1970), Inflation is always and everywhere a monetary phenomenon. There is a lack of consensus among researchers regarding the stimulus of changes in money supply over price level. Even though a very large number of researches conducted to understand the...

In this article, we use as case study the Spanish economy in the Early Modern period. We use recent time series data for the period 1492 - 1810. We consider the possibility that a linear cointegrated regression model with multiple structural changes would provide a good empirical description of...

At present West European banks are increasingly branching out into asset management as well as the consulting business, which cannot be directly influenced by monetary controls. We have therefore carried out a regression analysis and a factor analysis of banks' balance-sheet items, and we have...

Many scholars have fought valiantly to change perceptions on the process of money creation. However, misconceptions remain in place some quarters. In order to demonstrate empirically that a new bank loan creates a new bank deposit (without the bank having to recruit a new deposit), the author...

In this paper we examine why monetary aggregates of euro area Member States have developed differently since the inception of the euro. We derive a money demand equation that incorporates housing wealth and collateral as well as substitution effects on real money holdings. Empirically, we show...

In a world with imperfect competition, market externalities or asymmetric information, the impact of money and monetary policy on the real sector depends on the way money is created. Two conflicting views of money supply can be distinguished in the literature: the endogeneity view and the...

Federal Reserve nonborrowed reserve supply systematically responded to changes in inflation and in the output gap over the period 1969-2000. While the feedback from output gap is always negative, the response of money supply to changes in inflation varies considerably across time. Nonborrowed...