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The Australian Monetary Base/Money Supply Relationship 1964–1977 *
Author(s) -
SHARPE IAN G.,
VOLKER PAUL A.
Publication year - 1980
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.1980.tb01686.x
Subject(s) - economics , bivariate analysis , monetary base , money supply , base (topology) , monetary policy , context (archaeology) , monetary economics , ordinary least squares , econometrics , mathematics , statistics , geography , mathematical analysis , archaeology
Utilizing bivariate techniques developed by Pierce and Haugh, the causal relationship between the Australian money supply (defined as either M 1 or M3) and various monetary base measures is examined. The evidence generally suggests a two‐way causal or feedback relationship with a strong positive contemporaneity, a positive relationship between money and lagged base measures and a negative feedback (or policy reaction) between the monetary base and lagged money. It suggests the possibility of bias in ordinary least squares estimates of money/reserve base ‘reduced form’ relationships in the Australian context.