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The Financial-Real Interaction and Investment in the Business Cycle: Theory and Empirical Evidence

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Book cover Money in Motion

Part of the book series: The Jerome Levy Economics Institute Series ((JLEI))

Abstract

For a long time contributions to monetary economics have focused on the monetary-real interaction. There is nowadays a considerable body of literature on the impact of monetary aggregates on aggregate economic activity. The monetary view of the impact of the variation of monetary aggregates on real output has been put forward by the work of Friedman and Schwartz (1963) and thereafter evidence was generated that monetary aggregates can contribute to economic fluctuations. The money-real output relation has also been taken up by Keynesian oriented studies along the Kaldorian line of endogenous money where, however, the money-real interaction is seen to be considerably weaker than in monetarist versions.1

The authors would like to thank Raul Zambrano for valuable research assistance. We also want to thank Richard Arena and Tracy Mott for helpful comments and David Gordon for making available to us a large data set employed in the econometric part of the paper. The work on this paper has been started while Semmler was visiting scholar at the Economics Department of Stanford University. The hospitality of Stanford University is gratefully acknowledged.

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Authors
  1. Willi Semmler
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  2. Reiner Franke
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Editor information

Editors and Affiliations

  1. University of Paris 8, Saint-Denis, France

    Ghislain Deleplace (Professor of Economics) (Professor of Economics)

  2. Graduate Faculty, New School for Social Research, New York, USA

    Edward J. Nell (Malcolm B. Smith Professor of Economics) (Malcolm B. Smith Professor of Economics)

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© 1996 Ghislain Deleplace and Edward J. Nell

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Semmler, W., Franke, R. (1996). The Financial-Real Interaction and Investment in the Business Cycle: Theory and Empirical Evidence. In: Deleplace, G., Nell, E.J. (eds) Money in Motion. The Jerome Levy Economics Institute Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-24525-3_24

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