International Evidence on Monetary Factors in Macroeconomic Fluctuations

Loading...
Thumbnail Image

View/Download File

Persistent link to this item

Statistics
View Statistics

Journal Title

Journal ISSN

Volume Title

Title

International Evidence on Monetary Factors in Macroeconomic Fluctuations

Alternative title

Published Date

1980-09

Publisher

Center for Economic Research, Department of Economics, University of Minnesota

Type

Working Paper

Abstract

Sudden upward jumps in the interest rate tend to precede sharp slides in output by 6 months to a little over a year. They also tend to precede slightly drops in the rate of growth in the money stock. In an earlier paper (1980) I pointed out that these empirical generalizations apply to both interwar and postwar data in the U.S. I argued in that paper that it was difficult to account for this persistent pattern under a monetarist interpretation of the business cycle. This paper shows that the pattern persists in data for West Germany, France, and Britain. It argues again that a monetarist interpretation of the results is strained -- moreso in the light of the paper's international evidence -- and suggests that the results are most naturally explained by passive response of the monetary system to non-monetary cyclical influences. The quick response of money stock to interest rates, together with the anticipation of cyclical developments by the financial markets which set interest rates, can account for the apparently strong causal role of the money stock in some countries and periods when interest rates are omitted from the system.

Keywords

Description

Related to

Replaces

License

Series/Report Number

Discussion Paper
137

Funding information

Isbn identifier

Doi identifier

Previously Published Citation

Sims, C.A., (1980), "International Evidence on Monetary Factors in Macroeconomic Fluctuations", Discussion Paper No. 137, Center for Economic Research, Department of Economics, University of Minnesota.

Other identifiers

Suggested citation

Sims, Christopher A.. (1980). International Evidence on Monetary Factors in Macroeconomic Fluctuations. Retrieved from the University Digital Conservancy, https://hdl.handle.net/11299/55042.

Content distributed via the University Digital Conservancy may be subject to additional license and use restrictions applied by the depositor. By using these files, users agree to the Terms of Use. Materials in the UDC may contain content that is disturbing and/or harmful. For more information, please see our statement on harmful content in digital repositories.