Financial Innovation and the Control of Monetary Aggregates: Some Evidence from Canada / Robert E. Lucas, Jr..

Format:

Book

Author/Creator:

Lucas, Robert E, Jr.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w1157.

NBER working paper series no. w1157

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Financial Innovation and the Control of Monetary Aggregates

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1983.

Summary:

This paper presents an empirical test of the proposition that control of a monetary aggregate will generate a rise in its velocity.The test is carried out utilizing the Canadian experience of controlling Ml growth from 1975:3 to 1982:3. Section One of the paper presents evidence of the instability of the Canadian demand from Ml money since 1975:3. Section Two develops a specific form of the proposition which emphasizes the role of asset substitution between classes of chartered bank deposits. A relative asset demand equation is derived from a wealth maximization model subject to a technological transactions constraint and this equation is estimated from 1961 through 1982.The results lend support to the proposition that central bank control of Ml generated a rise in Ml velocity.

Notes:

Print version record

June 1983.