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Does Money Matter? An Empirical Investigation

Author

Listed:
  • Huston, Barry

    (Department of Economics Marquette University)

  • McGibany, James M

    (Department of Economics Marquette University)

  • Nourzad, Farrokh

    (Department of Economics Marquette University)

Abstract

This paper uses a simultaneous-equations model of the new consensus macroeconomic model to examine whether the inclusion of the money stock in the aggregate demand function improves the statistical fit of the model. The results indicate that the consensus model is accurate for the U.S. in that the inclusion of money does not increase the predictive power of the model. However, the results reveal that the estimated coefficients are more robust when money is included as an instrumental variable in the simultaneous equations consensus model.

Suggested Citation

  • Huston, Barry & McGibany, James M & Nourzad, Farrokh, 2010. "Does Money Matter? An Empirical Investigation," Working Papers and Research 2010-09, Marquette University, Center for Global and Economic Studies and Department of Economics.
    • Handle: RePEc:mrq:wpaper:2010-09
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    File URL: http://epublications.marquette.edu/econ_workingpapers/9
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    More about this item

    Keywords

    consensus macro model; monetary policy; Phillips Curve; Taylor Rule; Economics;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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