The liquidity effect: identifying short-run interest rate dynamics using long-run restrictions

Article Abstract:

The short-term reactions of interest rates to nominal money supply shocks were examined in a time series model incorporating interest rate, output, money and prices. It was discovered that in the postwar period, there was a negative correlation between interest rates and increase in money supply, a condition called the liquidity effect. It was suggested that the liquidity effect is an important component of macroeconomic studies on money and interest rate patterns.

Interest rates, Liquidity (Finance), Money supply

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Identifying the effects of money supply shocks on industry-level output

Article Abstract:

Industry level output is affected by money supply shocks through its effects on the long-run monetary neutrality of four aggregate variables namely interest rate, output, real money and nominal money. Cross industry regression showed that the response of the industries follow the model on imperfect information due to the response of the industries in terms of market structure and the impact of money on industry-specific demand.

Production Management, Models, Economic research, Monetary policy

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The case for a "productivity norm": comment on Dowd

Article Abstract:

A 'productivity norm' should reflect opposite changes in productivity with movements in price levels instead of zero inflation. The claim that a productivity norm lead to macroeconomic stability than price stability is disputed. It is argued that the arguments undermine the concept of productivity norm as well as the case for stable price levels. The arguments are shown to be logically erroneous and unrealistic.

Analysis, Price control, Price regulations

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