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Sources of Growth of the Australian Money Supply

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  • Ian G. Sharpe

    (Sydney University and Simon Fraser University. An earlier version of this paper was presented at staff seminars in the Department of Economics, Australian National University and in the Research Department, Reserve Bank of Australia. The author is indebted to L. Hargreaves and T. Truong for research assistance and to V. Hall, J. Henderson and M. Parkin for comments on an earlier draft. The Reserve Bank of Australia generously provided the financial support necessary to undertake the project, and supplied the seasonally adjusted data.)

Abstract

Variation in the Australian money supply is analyzed in two frameworks: (1) the “formations table†framework; and (2) a framework obtained by modifying traditional monetary decomposition to accommodate the ability of Australian banks to change their LGS assets by transacting with the central bank at a policy-determined interest rate. Evidence is presented on the determinants of the Australian money supply over the period 1960-75. Variation in the augmented monetary base (monetary base plus trading banks' holdings of government securities) is found to be a major source of variation in the money supply.

Suggested Citation

  • Ian G. Sharpe, 1976. "Sources of Growth of the Australian Money Supply," Australian Journal of Management, Australian School of Business, vol. 1(1), pages 85-106, April.
    • Handle: RePEc:sae:ausman:v:1:y:1976:i:1:p:85-106
    DOI: 10.1177/031289627600100105
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    References listed on IDEAS

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    1. Robert A. Mundell, 1962. "The Appropriate Use of Monetary and Fiscal Policy for Internal and External Stability," IMF Staff Papers, Palgrave Macmillan, vol. 9(1), pages 70-79, March.
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