TY  - JOUR
AU  - Plosser,Charles I.
TI  - Money and Business Cycles:  A Real Business Cycle Interpretation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3221
PY  - 1991
Y2  - April 1991
UR  - http://www.nber.org/papers/w3221
L1  - http://www.nber.org/papers/w3221.pdf
N1  - Author contact info:
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 focuses on the role of money in economic fluctuations. While money may play an important role in market economies, its role as an important impulse to business cycles remains a highly controversial hypothesis. For years economists have attempted to construct monetary theories of the business cycle with only limited empirical success. Alternatively, recent real theories of the cycle have taken the view that to a first approximation independent variations in the nominal quantity of outside money are neutral. This paper finds that the empirical evidence for a monetary theory of the cycle is weak. Not only do variations in nominal money explain very little of subsequent movements in real activity, but what explanatory power exists arises from variations in endogenous components of money.
ER  -