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Chapter13_Money_Output

# Chapter13_Money_Output - Money and Output Juan...

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Unformatted text preview: Money and Output Juan Rubio-Ram&rez Duke University and Federal Reserve Bank of Atlanta April 14, 2009 Juan Rubio-Ram&rez (PENN) Money and Output April 14, 2009 1 / 13 Money, Prices, and Output What are the e/ects of changes of money supply on prices and output? We will think about two cases: 1 The long run. 2 The short run (money and the Cycle). Juan Rubio-Ram&rez (PENN) Money and Output April 14, 2009 2 ¡ 13 Some Facts about Money in the Long Run Reported by McCandless and Weber (1995) and Rolnick and Weber (1998): 1 There is a high (almost unity) correlation between the rate of growth of monetary supply and the rate of in&ation. 2 There is no correlation between the growth rates of money and real output. 3 There in no correlation between in&ation and real output. 4 In&ation and money growth are higher under ¡at money than under commodity standards. Juan Rubio-Ram¢rez (PENN) Money and Output April 14, 2009 3 / 13 Money in the Long Run Economist have a pretty good idea of how to think about this case. Take the Fisher Equation (really an accounting identity): MV = PY If V and Y are roughly constant then g m = g p &In¡ation is always and everywhere a monetary phenomenon¢,...
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Chapter13_Money_Output - Money and Output Juan...

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