This article by John Duca discusses how shifts in technology, transactions, and asset preferences can weaken the relationships between monetary aggregates, the opportunity cost of money, and nominal output. Observed shifts in these general relationships are shown to be consistent with plausible...

John Duca reviews three episodes of "missing money," periods during which one of the monetary aggregates was unusually weak. Duca finds that in each of these episodes, an increased regulatory burden on banks encouraged households and firms to bypass the banking system in favor of nonbank...