Direct effects of base money on aggregate demand : theory and evidence $

@inproceedings{Nelson2000DirectEO,
  title={Direct effects of base money on aggregate demand : theory and evidence \$},
  author={Edward Nelson},
  year={2000}
}
Meltzer (The transmission process. In Deutsche Bundesbank (ed.), The Monetary Transmission Process, 2001) shows that real monetary base growth is a significant determinant of consumption growth in the US, controlling for the short-term real interest rate. In this paper, I show that the same property of base money holds for total output (relative to trend or potential) in both the US and the UK. The standard optimizing IS-LM model cannot account for this result, but I show that it can once the… CONTINUE READING
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