TY  - JOUR
AU  - Lucas,Robert E., Jr.
TI  - Financial Innovation and the Control of Monetary Aggregates:  Some Evidence from Canada
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1157
PY  - 1983
Y2  - June 1983
UR  - http://www.nber.org/papers/w1157
L1  - http://www.nber.org/papers/w1157.pdf
N1  - Author contact info:
Robert E. Lucas, Jr.
Department of Economics
The University of Chicago
1126 East 59th Street
Chicago, IL  60637
Tel: 773/702-8179
Fax: 773/702-8490
E-Mail: relucas@midway.uchicago.edu
AB  - 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.
ER  -