TY  - JOUR
AU  - King,Robert G.
AU  - Plosser,Charles I.
TI  - The Behavior of Money, Credit, and Prices in a Real Business Cycle
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 853
PY  - 1984
Y2  - November 1984
UR  - http://www.nber.org/papers/w0853
L1  - http://www.nber.org/papers/w0853.pdf
N1  - Author contact info:
Robert King
Department of Economics
Boston University
270 Bay State Road
Boston, MA  02215
Tel: 617/353-5941
E-Mail: rking@bu.edu

Charles I. Plosser
President
Federal Reserve Bank of Philadelphia
Ten Independence Mall
Philadelphia, PA 19106
Tel: 215/574-6432
Fax: 585/442-7069
E-Mail: charles.plosser@phil.frb.org
AB  - This paper analyzes the interaction of money and the price level with a business cycle that is fully real in origin, adopting a view which differs sharply from traditional theories that assign a significant causal influence to monetary movements. The theoretical analysis focuses on a banking system that produces transaction. services on demand and thus reflects market activity. Under one regime of bank regulation and fiat money supply by the monetary authority, the real business cycle theory predicts that (i)movements in external monetary measures should be uncorrelated with real activity and(ii) movements in internal monetary measures should be positively correlated with real activity. Preliminary empirical analysis provides general support for this focus on the banking sector since much of the correlation between monetary measures and real activity is apparently with inside money.
ER  -