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Open Economies Review

, Volume 26, Issue 2, pp 225–236 | Cite as

On the Output Effects of Monetary Variability

  • Apostolos Serletis
  • Sajjadur Rahman
Research Article

Abstract

In this paper we provide an update regarding the effects of money growth variability on real economic activity in the United States using monthly data and the new CFS Divisia monetary aggregates, extending the work in Serletis and Shahmoradi (Macroecon Dyn 10:652–666 2006) and Serletis and Rahman (Open Econ Rev 20:607–630 2009, Macroecon Dyn 17:1638–1658 2013). We present evidence that increased uncertainty about the growth rate of the CFS Divisia M1, M2M, and M4+ monetary aggregates is associated with a lower average growth rate of real economic activity in the United States. We also argue that optimal monetary aggregation, as suggested over thirty years ago by Barnett (J Money Credit Bank 14:687–710 1982), will further improve our understanding of how money affects the economy.

Keywords

CFS divisia monetary aggregates VARMA GARCH-in-mean 

JEL Classifications

C32 E52 E44 

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Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of CalgaryCalgaryCanada

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