Key Developments in Monetary Economics: Screen Reader version ♣
Money and Inflation: Some Critical Issues
Bennett T. McCallum
Carnegie Mellon University
Edward Nelson
Federal Reserve Board
Figure 1. Growth in M1 and M2 (four quarter growth rates)
| M1 4 qtr growth | M2 4 qtr growth | |
|---|---|---|
| 1960 | 0.406698564593544 | 3.7753329473076 |
| 1960 | -0.664136622391361 | 3.06937471474191 |
| 1960 | -0.447479981158492 | 3.50106945851604 |
| 1960 | 0.380137799952238 | 4.64437962755217 |
| 1961 | 1.16750059566332 | 5.89219953130232 |
| 1961 | 2.12511938872996 | 6.98549761983861 |
| 1961 | 1.77430801987225 | 6.88492495105504 |
| 1961 | 2.74556213017775 | 7.2041166380789 |
| 1962 | 2.89684408855396 | 7.56665612814828 |
| 1962 | 2.82908580780898 | 7.85389072847683 |
| 1962 | 2.13854021385354 | 7.71344255622277 |
| 1962 | 1.7737848422018 | 7.97000000000011 |
| 1963 | 2.17441062027947 | 8.14147153913981 |
| 1963 | 2.43292405638951 | 8.20301256835845 |
| 1963 | 3.57305416476993 | 8.71043930089741 |
| 1963 | 4.02897238569467 | 8.64128924701307 |
| 1964 | 3.60663082437231 | 8.04493567675305 |
| 1964 | 3.37402885682599 | 7.55453094520305 |
| 1964 | 3.99912107229205 | 7.79525506213611 |
| 1964 | 4.32985204525721 | 7.91986359761279 |
| 1965 | 4.45405405405428 | 8.25926547040072 |
| 1965 | 4.3375563667595 | 8.21104699093159 |
| 1965 | 3.88759771814898 | 7.88455336988069 |
| 1965 | 4.37956204379563 | 8.02591041946449 |
| 1966 | 5.40260815566138 | 7.95445743939294 |
| 1966 | 5.92714550319 | 7.46609782111824 |
| 1966 | 4.35224730526786 | 6.03048871618594 |
| 1966 | 2.81718281718282 | 4.80438756855577 |
| 1967 | 2.06205813040063 | 4.49131869708695 |
| 1967 | 2.3703128035751 | 5.72096980008508 |
| 1967 | 4.95030208536369 | 7.95686799633534 |
| 1967 | 6.35445005829772 | 9.14038515210703 |
| 1968 | 6.69617086780836 | 9.24196649272186 |
| 1968 | 7.04118428544335 | 8.44229866559387 |
| 1968 | 6.77808727947967 | 7.62501632066842 |
| 1968 | 7.32687739813651 | 7.8378723948345 |
| 1969 | 7.84490532010822 | 7.83155248271521 |
| 1969 | 6.8794326241133 | 7.01830324016831 |
| 1969 | 5.30434782608715 | 5.64721581948316 |
| 1969 | 3.91556009533502 | 4.14394119041975 |
| 1970 | 3.16053511705687 | 2.77453951970163 |
| 1970 | 3.10218978102174 | 2.56543595077138 |
| 1970 | 3.9966969446735 | 4.22001492794397 |
| 1970 | 5.01310615989518 | 6.10804349063591 |
| 1971 | 5.64110876965473 | 9.11411070780405 |
| 1971 | 7.0796460176993 | 12.5626725254915 |
| 1971 | 7.51151341908865 | 13.3539003966505 |
| 1971 | 6.59906396255852 | 13.3744635193133 |
| 1972 | 6.90501764615622 | 13.1503716409376 |
| 1972 | 6.40120210368145 | 11.6810970421901 |
| 1972 | 6.77991137370755 | 12.0966174183515 |
| 1972 | 8.38577491584958 | 12.7667628826953 |
| 1973 | 8.42543418975184 | 12.0722127796408 |
| 1973 | 7.93673209998575 | 11.1270445888416 |
| 1973 | 6.9442523170562 | 9.02232820290488 |
| 1973 | 5.71158520118825 | 6.87759640804004 |
| 1974 | 5.34815991527642 | 6.32454810017621 |
| 1974 | 5.10270836059142 | 5.86740866198887 |
| 1974 | 4.824731600052 | 5.5197645748826 |
| 1974 | 4.76433771873828 | 5.77149587750294 |
| 1975 | 3.70696154812754 | 5.83654587509642 |
| 1975 | 4.29478401593428 | 8.40665828667191 |
| 1975 | 5.31836130306035 | 11.1668048541494 |
| 1975 | 4.7671299683003 | 12.134372680029 |
| 1976 | 5.64643160063033 | 13.5317257958761 |
| 1976 | 5.84865122941061 | 12.8074490512994 |
| 1976 | 4.9560632688928 | 11.7333966166041 |
| 1976 | 6.10962411264984 | 13.0524016021723 |
| 1977 | 7.08796880376192 | 13.2952613173352 |
| 1977 | 7.35227785295431 | 12.9543684784309 |
| 1977 | 7.94820272382215 | 12.564475999758 |
| 1977 | 8.12678218907656 | 10.8778402436165 |
| 1978 | 7.81835707400653 | 9.2345595106618 |
| 1978 | 8.37184873949561 | 8.35539377895434 |
| 1978 | 8.52119958634966 | 7.88970053101191 |
| 1978 | 8.12455624302668 | 7.67686904164579 |
| 1979 | 7.38055031290366 | 7.25359050137347 |
| 1979 | 7.68634292914627 | 7.78490354761491 |
| 1979 | 8.18562988374299 | 8.31709388897166 |
| 1979 | 7.26078799249532 | 7.91190464511675 |
| 1980 | 7.7058279370954 | 8.21328434690157 |
| 1980 | 4.20342034203404 | 7.28165655325482 |
| 1980 | 5.5227693120761 | 7.96909237688876 |
| 1980 | 7.4164771733425 | 8.6454545454546 |
| 1981 | 6.93979214978949 | 8.60397587670316 |
| 1981 | 10.330828366589 | 9.90382287563004 |
| 1981 | 6.91151919866445 | 8.57081820123885 |
| 1981 | 5.55284155674989 | 9.0578194293369 |
| 1982 | 6.60187936711911 | 9.64995269631034 |
| 1982 | 5.01056916934174 | 9.04339467729322 |
| 1982 | 5.89475327920059 | 9.09842194325335 |
| 1982 | 8.82443690219062 | 8.76395442513523 |
| 1983 | 9.40254652301666 | 12.1619086919006 |
| 1983 | 11.62305226273 | 12.6182212182988 |
| 1983 | 12.8880041288799 | 12.3363272373114 |
| 1983 | 10.4054437198754 | 11.8424069273229 |
| 1984 | 9.08339646029895 | 8.33807150740829 |
| 1984 | 7.66096713865879 | 7.9137042593435 |
| 1984 | 6.13284566651427 | 7.64537777349683 |
| 1984 | 5.46995377503852 | 8.06868712352976 |
| 1985 | 6.51515151515132 | 8.97443813287235 |
| 1985 | 7.19027234940147 | 8.57397585263797 |
| 1985 | 10.0676923076923 | 9.43354015033991 |
| 1985 | 11.9917214511808 | 8.63646312103306 |
| 1986 | 11.4331436699858 | 7.02144536672457 |
| 1986 | 13.0686422039589 | 7.93725904997843 |
| 1986 | 13.8544112713855 | 8.35320894607009 |
| 1986 | 15.5016849657572 | 9.15598893276372 |
| 1987 | 16.7331524918888 | 9.25418569254158 |
| 1987 | 14.2966830466829 | 7.34842819196921 |
| 1987 | 9.77705755254375 | 5.36967623456016 |
| 1987 | 6.33411764705873 | 4.2524393695168 |
| 1988 | 3.69070943636944 | 4.44595200310116 |
| 1988 | 3.81566572618582 | 5.56376346798352 |
| 1988 | 5.05032431223437 | 5.91732222368112 |
| 1988 | 4.21756063020008 | 5.64282932241211 |
| 1989 | 3.37478578019949 | 4.38892561791783 |
| 1989 | 0.414132263491644 | 3.11202139159106 |
| 1989 | -0.434338272866645 | 4.10129835001354 |
| 1989 | 0.535054567072904 | 5.22076238995375 |
| 1990 | 1.81083953241233 | 6.14215397606705 |
| 1990 | 3.93951110538292 | 6.28889869785931 |
| 1990 | 4.60183046788133 | 5.39478385137551 |
| 1990 | 4.18585005279841 | 4.14520975568343 |
| 1991 | 4.32132270051355 | 3.93807116163645 |
| 1991 | 5.34430023972886 | 4.2733001796115 |
| 1991 | 6.23926731539787 | 3.54288649203914 |
| 1991 | 7.94616070704609 | 3.09425498292278 |
| 1992 | 10.9581365564717 | 2.71323684926128 |
| 1992 | 11.7667830658768 | 1.60700950863743 |
| 1992 | 12.5692733990148 | 1.36509290766784 |
| 1992 | 14.3393675354917 | 1.76720727848111 |
| 1993 | 11.9030442937524 | 0.628523802520077 |
| 1993 | 11.935687706241 | 1.00441944556057 |
| 1993 | 12.2358974358974 | 1.37313432835831 |
| 1993 | 10.5899356194974 | 1.25550254112947 |
| 1994 | 9.85688499226376 | 1.85625475025822 |
| 1994 | 7.55503982939225 | 1.71721287618604 |
| 1994 | 5.18139449876634 | 1.28309100388114 |
| 1994 | 2.52465248901093 | 0.661234752732556 |
| 1995 | 1.09441934158853 | 0.469717117410242 |
| 1995 | 0.274092433299902 | 1.1168974857883 |
| 1995 | -0.582102519548223 | 2.86253538848694 |
| 1995 | -1.53543078973318 | 3.88032949431786 |
| 1996 | -2.35089246843709 | 5.03227895107674 |
| 1996 | -2.3961150367853 | 5.30962599632119 |
| 1996 | -3.57715051414314 | 4.44166434992105 |
| 1996 | -4.33976697658027 | 4.62747113566704 |
| 1997 | -3.93520582553188 | 4.5853844270992 |
| 1997 | -4.85624906897038 | 4.50628784350258 |
| 1997 | -3.07845684420351 | 5.15514227660321 |
| 1997 | -1.32562359671547 | 5.56052631578948 |
| 1998 | -0.0711611645682436 | 6.26533177306801 |
| 1998 | 1.1899170189441 | 6.98950074994661 |
| 1998 | 0.679508758804921 | 7.14436390944444 |
| 1998 | 2.12268561810455 | 8.27163263779822 |
| 1999 | 1.94439284166266 | 8.15299405349417 |
| 1999 | 2.24972922791338 | 7.75454618280845 |
| 1999 | 1.98142414860745 | 7.46731768782495 |
| 1999 | 1.84354302109056 | 6.15075253467177 |
| 2000 | 1.42440624430512 | 5.94473104655014 |
| 2000 | 0.556867017734683 | 6.12891234852429 |
| 2000 | 0.258044930175781 | 5.80014949216625 |
| 2000 | -1.73524740012587 | 5.95269942952989 |
| 2001 | -0.907321455307678 | 7.13106001281412 |
| 2001 | 1.15271173177663 | 8.10625271445978 |
| 2001 | 5.78046934140774 | 9.34359350866143 |
| 2001 | 7.35025009149661 | 10.2088167053365 |
| 2002 | 8.01704339417447 | 9.31974190461635 |
| 2002 | 6.1382367818138 | 7.46860541969617 |
| 2002 | 2.47896032518493 | 7.03123515364199 |
| 2002 | 3.23597931700694 | 6.83653250773988 |
| 2003 | 3.63407469576164 | 6.49496693250328 |
| 2003 | 6.43081408387561 | 7.72676844415492 |
| 2003 | 8.34636871508381 | 7.89621642095788 |
| 2003 | 7.38641054572505 | 5.48565268544868 |
| 2004 | 6.84051398337059 | 4.68272858553522 |
| 2004 | 5.52863088026157 | 4.81006565286265 |
| 2004 | 4.54522017118647 | 3.75955109182767 |
| 2004 | 5.41503293098562 | 5.32784633473617 |
| 2005 | 3.88852392743445 | 5.17608955240168 |
| 2005 | 2.39610632721827 | 3.70178520887948 |
| 2005 | 1.61524993218466 | 4.01135528618172 |
| 2005 | 0.308747021928085 | 4.03436565937935 |
| 2006 | 0.792859401221151 | 4.87884537621699 |
| 2006 | 0.955514929920293 | 5.1057453152278 |
| 2006 | -0.499927195068921 | 4.89451133666411 |
| 2006 | -0.479872034124229 | 5.20615532724636 |
| 2007 | -0.875901841082929 | 5.2317046044339 |
| 2007 | -0.304222903638607 | 5.80819958061408 |
| 2007 | 0.346341463415136 | 6.09164603330737 |
| 2007 | 0.508974015537339 | 5.88123153178911 |
| 2008 | 0.808179162609789 | 6.5372095317278 |
| 2008 | 0.779830955898137 | 6.49694623616083 |
| 2008 | 3.3590977589806 | 6.10587660365463 |
| 2008 | 11.2909478581118 | 8.30482535109831 |
Figure 2. Old and New Definitions of M1 (growth rates of annual averages)
| M1growth-old | M1growth-new | |
|---|---|---|
| 1960 | -0.110170111005531 | -0.0712250712250672 |
| 1961 | 2.1082600233825 | 1.96008553100499 |
| 1962 | 2.20687230923858 | 2.4117441454037 |
| 1963 | 2.9050062941803 | 3.05460750853242 |
| 1964 | 3.99648909900936 | 3.82513661202186 |
| 1965 | 4.29033430629377 | 4.25837320574163 |
| 1966 | 4.64233358264772 | 4.60455866605475 |
| 1967 | 3.97879159554789 | 3.93389880081895 |
| 1968 | 7.12625125968047 | 6.97903475446743 |
| 1969 | 6.01885777867328 | 5.94502170195976 |
| 1970 | 3.86151797603195 | 3.8361266294227 |
| 1971 | 6.69009324009325 | 6.70731707317075 |
| 1972 | 7.07143645243996 | 7.12605042016807 |
| 1973 | 7.45480460304875 | 7.23773663842694 |
| 1974 | 5.47218002278772 | 5.00341363503364 |
| 1975 | 4.2370905437631 | 4.52349990711502 |
| 1976 | 5.04646342516625 | 5.63405314138449 |
Figure 3. Growth in M1 and Adjusted M1
| M1 4-qtr growth | Adjusted M1 4-qtr growth | |
|---|---|---|
| 1981 | 6.93979214978949 | 6.43489883101636 |
| 1981 | 10.330828366589 | 10.2384073786627 |
| 1981 | 6.91151919866445 | 6.69397685023348 |
| 1981 | 5.55284155674989 | 5.36158799740019 |
| 1982 | 6.60187936711911 | 6.79953617731848 |
| 1982 | 5.01056916934174 | 4.71951734219805 |
| 1982 | 5.89475327920059 | 5.55165754382714 |
| 1982 | 8.82443690219062 | 8.67566347959702 |
| 1983 | 9.40254652301666 | 9.03593726495704 |
| 1983 | 11.62305226273 | 11.6074112707061 |
| 1983 | 12.8880041288799 | 12.76674929958 |
| 1983 | 10.4054437198754 | 9.94163853284521 |
| 1984 | 9.08339646029895 | 8.7099478276392 |
| 1984 | 7.66096713865879 | 7.17548811165773 |
| 1984 | 6.13284566651427 | 5.73321689965182 |
| 1984 | 5.46995377503852 | 5.29566723439253 |
| 1985 | 6.51515151515132 | 6.29368771787849 |
| 1985 | 7.19027234940147 | 7.08479082473171 |
| 1985 | 10.0676923076923 | 10.0222597673402 |
| 1985 | 11.9917214511808 | 12.0352307988936 |
| 1986 | 11.4331436699858 | 11.5191387829335 |
| 1986 | 13.0686422039589 | 13.4772190494877 |
| 1986 | 13.8544112713855 | 14.4125779615731 |
| 1986 | 15.5016849657572 | 16.056500094161 |
| 1987 | 16.7331524918888 | 17.5076556860846 |
| 1987 | 14.2966830466829 | 14.7470155511913 |
| 1987 | 9.77705755254375 | 9.97102209841455 |
| 1987 | 6.33411764705873 | 6.29997636189996 |
| 1988 | 3.69070943636944 | 3.32549179397576 |
| 1988 | 3.81566572618582 | 3.35386447805518 |
| 1988 | 5.05032431223437 | 4.60647048058073 |
| 1988 | 4.21756063020008 | 3.79910296419883 |
| 1989 | 3.37478578019949 | 2.83716253454376 |
| 1989 | 0.414132263491644 | -0.26212151623399 |
| 1989 | -0.434338272866645 | -1.03948474371679 |
| 1989 | 0.535054567072904 | -0.0648265611101167 |
| 1990 | 1.81083953241233 | 0.96601233577924 |
| 1990 | 3.93951110538292 | 2.87285537038502 |
| 1990 | 4.60183046788133 | 2.86798484559569 |
| 1990 | 4.18585005279841 | 2.0539670235463 |
| 1991 | 4.32132270051355 | 1.92983814987338 |
| 1991 | 5.34430023972886 | 3.53960607577083 |
| 1991 | 6.23926731539787 | 4.80889796414782 |
| 1991 | 7.94616070704609 | 6.87449268917427 |
| 1992 | 10.9581365564717 | 10.819168600596 |
| 1992 | 11.7667830658768 | 11.8934666454821 |
| 1992 | 12.5692733990148 | 12.4707144218858 |
| 1992 | 14.3393675354917 | 14.3753841010925 |
| 1993 | 11.9030442937524 | 11.3276692647095 |
| 1993 | 11.935687706241 | 10.6433124756982 |
| 1993 | 12.2358974358974 | 11.0984381168299 |
| 1993 | 10.5899356194974 | 9.53278294431554 |
| 1994 | 9.85688499226376 | 9.32890327035934 |
| 1994 | 7.55503982939225 | 6.95625858771077 |
| 1994 | 5.18139449876634 | 4.47930609437775 |
| 1994 | 2.52465248901093 | 1.41866999570807 |
| 1995 | 1.09441934158853 | -0.858848683689576 |
| 1995 | 0.274092433299902 | -0.748172257211513 |
| 1995 | -0.582102519548223 | -0.15803477240321 |
| 1995 | -1.53543078973318 | 0.961452380753403 |
| 1996 | -2.35089246843709 | 3.7955318059515 |
| 1996 | -2.3961150367853 | 5.08324337305646 |
| 1996 | -3.57715051414314 | 4.80482344620962 |
| 1996 | -4.33976697658027 | 4.85386631310219 |
| 1997 | -3.93520582553188 | 4.1271670766717 |
| 1997 | -4.85624906897038 | 3.56895587361431 |
| 1997 | -3.07845684420351 | 4.48276560577068 |
| 1997 | -1.32562359671547 | 5.01968573465618 |
| 1998 | -0.0711611645682436 | 5.58336114556857 |
| 1998 | 1.1899170189441 | 5.98265563772062 |
| 1998 | 0.679508758804921 | 5.46821124522461 |
| 1998 | 2.12268561810455 | 6.11383363428782 |
| 1999 | 1.94439284166266 | 5.64444422666682 |
| 1999 | 2.24972922791338 | 5.58995539163895 |
| 1999 | 1.98142414860745 | 5.36497218203274 |
| 1999 | 1.84354302109056 | 3.57601799032238 |
| 2000 | 1.42440624430512 | 3.56745821367549 |
| 2000 | 0.556867017734683 | 2.84406283329077 |
| 2000 | 0.258044930175781 | 2.66597639839619 |
| 2000 | -1.73524740012587 | 2.46303538434473 |
| 2001 | -0.907321455307678 | 2.32805441403171 |
| 2001 | 1.15271173177663 | 3.70329211293189 |
| 2001 | 5.78046934140774 | 6.62714864966708 |
| 2001 | 7.35025009149661 | 7.65081859935151 |
| 2002 | 8.01704339417447 | 8.49843214680787 |
| 2002 | 6.1382367818138 | 7.87941607149172 |
| 2002 | 2.47896032518493 | 5.93792309581313 |
| 2002 | 3.23597931700694 | 6.53459404231068 |
| 2003 | 3.63407469576164 | 5.9963673382489 |
| 2003 | 6.43081408387561 | 7.4641555620644 |
| 2003 | 8.34636871508381 | 9.04734230975809 |
| 2003 | 7.38641054572505 | 8.7754159922602 |
| 2004 | 6.84051398337059 | 9.90369924517735 |
| 2004 | 5.52863088026157 | 9.14484736324922 |
| 2004 | 4.54522017118647 | 7.68749629046236 |
| 2004 | 5.41503293098562 | 7.65493324739785 |
| 2005 | 3.88852392743445 | 5.56498428034163 |
| 2005 | 2.39610632721827 | 4.3411408788973 |
| 2005 | 1.61524993218466 | 3.87942670548302 |
| 2005 | 0.308747021928085 | 2.68997397975225 |
| 2006 | 0.792859401221151 | 2.9244962510312 |
| 2006 | 0.955514929920293 | 2.86233067662988 |
| 2006 | -0.499927195068921 | 2.10061271642382 |
| 2006 | -0.479872034124229 | 1.95428178073183 |
Figure 4. Quarterly values of M1 and M2 velocity
| M1 velocity | M2 velocity | |
|---|---|---|
| 1959 | 3.55622009569379 | 1.72148233931674 |
| 1959 | 3.6183586337761 | 1.74064354176175 |
| 1959 | 3.59844559585493 | 1.72002701789936 |
| 1959 | 3.65787598004277 | 1.72717074265201 |
| 1960 | 3.76697641172266 | 1.76431201874791 |
| 1960 | 3.76934097421206 | 1.74759216207241 |
| 1960 | 3.75443577004968 | 1.72612573417447 |
| 1960 | 3.71857988165681 | 1.68428387650086 |
| 1961 | 3.73056994818654 | 1.66930129623775 |
| 1961 | 3.78068739770869 | 1.6732201986755 |
| 1961 | 3.83193863319386 | 1.6775211152946 |
| 1961 | 3.88804422944022 | 1.6878 |
| 1962 | 3.95582513160907 | 1.69324973057706 |
| 1962 | 3.97817189631653 | 1.6785954139883 |
| 1962 | 4.02822030040967 | 1.67217760982523 |
| 1962 | 4.02874603893166 | 1.64851347596554 |
| 1963 | 4.04905913978495 | 1.63752491393369 |
| 1963 | 4.07014428412876 | 1.62582018088314 |
| 1963 | 4.11272247857616 | 1.62657512818285 |
| 1963 | 4.13511749347261 | 1.62020460358056 |
| 1964 | 4.21362162162164 | 1.63407680697636 |
| 1964 | 4.24457805454155 | 1.62959604286892 |
| 1964 | 4.24994717937885 | 1.62165430506289 |
| 1964 | 4.22690302398332 | 1.6010743344656 |
| 1965 | 4.32022355619955 | 1.61652854155372 |
| 1965 | 4.37188721959253 | 1.61839097973488 |
| 1965 | 4.42464917632706 | 1.62576595426693 |
| 1965 | 4.48051948051949 | 1.63985374771481 |
| 1966 | 4.54124116260802 | 1.65906155832974 |
| 1966 | 4.5457548086264 | 1.65865589111017 |
| 1966 | 4.63710777626195 | 1.67686235816478 |
| 1966 | 4.70404197434901 | 1.68901758303098 |
| 1967 | 4.72080046180489 | 1.68456468003296 |
| 1967 | 4.6819130764851 | 1.65419432709716 |
| 1967 | 4.66295264623955 | 1.63924794359577 |
| 1967 | 4.67403617759913 | 1.63540467970848 |
| 1968 | 4.7599639314698 | 1.65895663104965 |
| 1968 | 4.80904255319149 | 1.67715805095227 |
| 1968 | 4.79634782608697 | 1.67287395365765 |
| 1968 | 4.78140960163432 | 1.66504624140384 |
| 1969 | 4.82056856187291 | 1.68028678013523 |
| 1969 | 4.85783012607831 | 1.69197434564049 |
| 1969 | 4.93625103220479 | 1.71608198886146 |
| 1969 | 4.9369266055046 | 1.71543234473729 |
| 1970 | 4.94618252553089 | 1.73054673321234 |
| 1970 | 4.98680611423971 | 1.74598614162581 |
| 1970 | 5.00476417341594 | 1.73617232260908 |
| 1970 | 4.92683307332295 | 1.69425965665236 |
| 1971 | 5.05493325149605 | 1.71230313425852 |
| 1971 | 5.04342599549212 | 1.67979580601572 |
| 1971 | 5.04771048744458 | 1.66081842923793 |
| 1971 | 5.05517342309382 | 1.63450527610846 |
| 1972 | 5.12458734031861 | 1.6400845238642 |
| 1972 | 5.19248693687329 | 1.64768093210843 |
| 1972 | 5.18453451376402 | 1.62492954693258 |
| 1972 | 5.21172022684307 | 1.61965507112583 |
| 1973 | 5.30222398729146 | 1.64171824404639 |
| 1973 | 5.38335732042393 | 1.6592063876119 |
| 1973 | 5.39658517656191 | 1.65915056072536 |
| 1973 | 5.48652446033978 | 1.68645465253239 |
| 1974 | 5.45300326715256 | 1.67289899768697 |
| 1974 | 5.54512635379063 | 1.69672037481431 |
| 1974 | 5.60352912142153 | 1.71142684857165 |
| 1974 | 5.67959034381858 | 1.72917594654788 |
| 1975 | 5.70483460559799 | 1.71494135645079 |
| 1975 | 5.74719503461448 | 1.69184820801125 |
| 1975 | 5.84323374340949 | 1.69074821168254 |
| 1975 | 5.98359129524032 | 1.70204243768415 |
| 1976 | 6.09668539970181 | 1.70544451217557 |
| 1976 | 6.10351826792963 | 1.68590562217724 |
| 1976 | 6.1543871399866 | 1.67276533770255 |
| 1976 | 6.20037288879141 | 1.65539353478566 |
| 1977 | 6.22844596765557 | 1.64684393849291 |
| 1977 | 6.31890756302522 | 1.65883520847121 |
| 1977 | 6.40951396070321 | 1.67066497749266 |
| 1977 | 6.42296378943098 | 1.67227401167244 |
| 1978 | 6.40439058309326 | 1.67141079483589 |
| 1978 | 6.61442279732479 | 1.73667735532142 |
| 1978 | 6.67581475128642 | 1.75026232948583 |
| 1978 | 6.79924953095686 | 1.77760337469957 |
| 1979 | 6.83617021276596 | 1.78620806342455 |
| 1979 | 6.82196219621963 | 1.78953084787383 |
| 1979 | 6.86963798115034 | 1.79889286126168 |
| 1979 | 6.97761063494841 | 1.81322727272728 |
| 1980 | 7.01906725070855 | 1.82539647085101 |
| 1980 | 7.06918890904381 | 1.80117525364792 |
| 1980 | 6.97462437395658 | 1.78500320444349 |
| 1980 | 7.12090864680021 | 1.82953309346499 |
| 1981 | 7.35218054774717 | 1.88272798321748 |
| 1981 | 7.24410866671887 | 1.85291467248734 |
| 1981 | 7.44144284821987 | 1.87536893471332 |
| 1981 | 7.39285714285713 | 1.83835884451605 |
| 1982 | 7.19859865893167 | 1.79215590651612 |
| 1982 | 7.2487139342429 | 1.7855214588728 |
| 1982 | 7.24264543242645 | 1.77166973271291 |
| 1982 | 7.04387581514036 | 1.75255277498545 |
| 1983 | 6.98505612561119 | 1.69621057560454 |
| 1983 | 6.97742452578145 | 1.70350922966538 |
| 1983 | 7.02847625889882 | 1.72772372603796 |
| 1983 | 7.10342835130969 | 1.74466239868807 |
| 1984 | 7.21098484848485 | 1.76312052358608 |
| 1984 | 7.27024008933558 | 1.77084183326534 |
| 1984 | 7.3403076923077 | 1.77902398281828 |
| 1984 | 7.36669101533966 | 1.76581308820311 |
| 1985 | 7.32076813655761 | 1.74956797642993 |
| 1985 | 7.25031832388006 | 1.74348304129379 |
| 1985 | 7.14240187856425 | 1.74109004674745 |
| 1985 | 7.04212414392868 | 1.74014827947457 |
| 1986 | 6.99281953087601 | 1.74008338296605 |
| 1986 | 6.79238329238328 | 1.71101426103102 |
| 1986 | 6.61652916912199 | 1.69478755251441 |
| 1986 | 6.4140705882353 | 1.67709268988938 |
| 1987 | 6.30304825260856 | 1.67580893309267 |
| 1987 | 6.29678892919521 | 1.6888400418003 |
| 1987 | 6.39387161708791 | 1.70625872915448 |
| 1987 | 6.4831386086033 | 1.72900020064442 |
| 1988 | 6.52361910620908 | 1.72191099203174 |
| 1988 | 6.54756050213537 | 1.72701826250213 |
| 1988 | 6.56974961676036 | 1.73884230457128 |
| 1988 | 6.68945602785681 | 1.75995441748224 |
| 1989 | 6.83566418703508 | 1.78674681392429 |
| 1989 | 7.02874081711561 | 1.8054292650629 |
| 1989 | 7.09892224788298 | 1.79703790314723 |
| 1989 | 7.07290390707497 | 1.77797007889065 |
| 1990 | 7.14972234979751 | 1.79257607637471 |
| 1990 | 7.1886418120195 | 1.80568735140522 |
| 1990 | 7.1763022323984 | 1.80295839753467 |
| 1990 | 7.11019216735587 | 1.78804098486007 |
| 1991 | 7.06019370847674 | 1.77665649454634 |
| 1991 | 7.01769529564092 | 1.78085328819635 |
| 1991 | 6.96624846059112 | 1.79576186271689 |
| 1991 | 6.8645309096372 | 1.80750593354431 |
| 1992 | 6.69892511903043 | 1.82106192087072 |
| 1992 | 6.62978305132345 | 1.85064037864163 |
| 1992 | 6.55353846153845 | 1.87610472229019 |
| 1992 | 6.39889633425306 | 1.89304906371773 |
| 1993 | 6.32848762248584 | 1.91311168709684 |
| 1993 | 6.23097911309041 | 1.92755690086733 |
| 1993 | 6.11194370830668 | 1.93717777906505 |
| 1993 | 6.07146251633602 | 1.96176546799873 |
| 1994 | 6.08793498034156 | 1.98495183247075 |
| 1994 | 6.16209359965013 | 2.01565182556942 |
| 1994 | 6.19617723718506 | 2.03946352483628 |
| 1994 | 6.29949591517468 | 2.07312561970864 |
| 1995 | 6.36282107096212 | 2.08747690959989 |
| 1995 | 6.41699380615895 | 2.08153563175023 |
| 1995 | 6.51271519706371 | 2.07186544342508 |
| 1995 | 6.65749676356363 | 2.07671763431781 |
| 1996 | 6.81069995541684 | 2.07734776578096 |
| 1996 | 6.97154774318489 | 2.09594783418724 |
| 1996 | 7.15328842028945 | 2.10092899035518 |
| 1996 | 7.40288499984626 | 2.11131578947368 |
| 1997 | 7.5526747315987 | 2.11597971655181 |
| 1997 | 7.77529356505401 | 2.12816798800086 |
| 1997 | 7.86412941836543 | 2.12885506231384 |
| 1997 | 7.95371236207226 | 2.12043477176975 |
| 1998 | 7.9886680289802 | 2.10467155547217 |
| 1998 | 8.0754448398577 | 2.09050708964191 |
| 1998 | 8.21721362229107 | 2.0902189321153 |
| 1998 | 8.26618441534658 | 2.07858442126592 |
| 1999 | 8.33560104476708 | 2.07000633541497 |
| 1999 | 8.4007626656982 | 2.06362352241469 |
| 1999 | 8.56566484517304 | 2.06763054916387 |
| 1999 | 8.63820541253337 | 2.08399430252988 |
| 2000 | 8.72241353496038 | 2.07364561828149 |
| 2000 | 8.98311563233615 | 2.09082057245331 |
| 2000 | 9.09992429977293 | 2.08152960651628 |
| 2000 | 9.26845187263627 | 2.07379555070286 |
| 2001 | 9.2153088359725 | 2.02644082213082 |
| 2001 | 9.19512630545381 | 2.00250767855059 |
| 2001 | 8.84971660846172 | 1.95833201365707 |
| 2001 | 8.84121256889601 | 1.92689164086687 |
| 2002 | 8.81133025597986 | 1.914516874149 |
| 2002 | 8.91615272482624 | 1.91771579480501 |
| 2002 | 8.96790502793299 | 1.90008108092113 |
| 2002 | 8.88920384181415 | 1.87205939457868 |
| 2003 | 8.81794622610949 | 1.86448398089009 |
| 2003 | 8.69838803139654 | 1.84837155154561 |
| 2003 | 8.70555326389607 | 1.85219051171363 |
| 2003 | 8.77719689398016 | 1.88177862268277 |
| 2004 | 8.79064126534948 | 1.89702346224939 |
| 2004 | 8.81946836390865 | 1.88694923128681 |
| 2004 | 8.84108899903831 | 1.89527021669143 |
| 2004 | 8.85756308649781 | 1.90058058559334 |
| 2005 | 9.03239535958367 | 1.92533204765312 |
| 2005 | 9.15305301645331 | 1.93366393227355 |
| 2005 | 9.27651312915597 | 1.94280079897942 |
| 2005 | 9.39065946050755 | 1.94280900735571 |
| 2006 | 9.54334869579907 | 1.95499369763476 |
| 2006 | 9.66834874568411 | 1.96187312599211 |
| 2006 | 9.84358536585371 | 1.9555433881995 |
| 2006 | 9.94435379782291 | 1.94616814412353 |
| 2007 | 10.0746835443038 | 1.94405535278948 |
| 2007 | 10.1696737787896 | 1.94438862212509 |
| 2007 | 10.3397258276214 | 1.94286901755171 |
| 2007 | 10.4220052335724 | 1.93615862441484 |
| 2008 | 10.4128513474355 | 1.9012592259464 |
| 2008 | 10.4518780188883 | 1.89106672347973 |
| 2008 | 10.2624635499953 | 1.87843165950707 |
| 2008 | 9.37078725071843 | 1.78886579942645 |
| 2009 | 9.05152050392632 | 1.71269806116491 |
| 2009 | 8.76999359543825 | 1.69818657513531 |
Figure 5. Responses to a monetary policy shock
| Δm (money growth) | π (inflation) | R (nominal interest rate) | Δx (nominal income growth) |
|---|---|---|---|
| 0 | 0 | 0 | 0 |
| -4 | 0 | 1 | 0 |
| -0.511 | -0.1262 | 0.7250 | -1.6109 |
| 1.1142 | -0.09150 | 0.52560 | 0.31670 |
| 0.80780 | -0.0664 | 0.38110 | 0.2296 |
| 0.5857 | -0.04810 | 0.27630 | 0.1665 |
| 0.42460 | -0.0349 | 0.2003 | 0.1207 |
| 0.3079 | -0.0253 | 0.1452 | 0.08750 |
| 0.2232 | -0.0183 | 0.1053 | 0.06340 |
| 0.1618 | -0.01330 | 0.0763 | 0.0460 |
| 0.1173 | -0.00960 | 0.0553 | 0.03340 |
| 0.08510 | -0.007 | 0.04010 | 0.02420 |
| 0.06170 | -0.0051 | 0.0291 | 0.0175 |
| 0.04470 | -0.0037 | 0.0211 | 0.01270 |
| 0.03240 | -0.0027 | 0.01530 | 0.00920 |
| 0.0235 | -0.0019 | 0.0111 | 0.0067 |
| 0.017 | -0.0014 | 0.008 | 0.00480 |
| 0.0124 | -0.001 | 0.00580 | 0.0035 |
| 0.0090 | -0.00070 | 0.00420 | 0.0025 |
| 0.00650 | -0.0005 | 0.00310 | 0.0018 |
Response dates depicted refer to date 1 expectation for periods 0 through 19 for a shock occurring in period 1.
Figure 6. Responses to an IS shock
| Δm | π | R |
|---|---|---|
| 0 | 0 | 0 |
| 0.9 | 0 | 0.025 |
| 5.1931 | 1.55540 | 0.66670 |
| -1.64970 | 1.3965 | 1.09960 |
| -0.8508 | 1.2678 | 1.3826 |
| -0.28890 | 1.1617 | 1.5585 |
| 0.1022 | 1.0727 | 1.65820 |
| 0.37010 | 0.9967 | 1.70410 |
| 0.54950 | 0.93060 | 1.71230 |
| 0.66560 | 0.87220 | 1.69440 |
| 0.7364 | 0.8201 | 1.6588 |
| 0.775 | 0.7729 | 1.61140 |
| 0.7909 | 0.7297 | 1.5566 |
| 0.791 | 0.6900 | 1.4975 |
| 0.7802 | 0.6531 | 1.43620 |
| 0.7621 | 0.6188 | 1.3742 |
| 0.73910 | 0.5866 | 1.3126 |
| 0.71310 | 0.5564 | 1.2522 |
| 0.6854 | 0.5279 | 1.1933 |
| 0.6568 | 0.501 | 1.1364 |
Figure 7. Responses to a natural output shock
| Δm | π | R | Δx |
|---|---|---|---|
| 0 | 0 | 0 | 0 |
| 0 | 0 | 0 | 0 |
| 0.261 | -0.18130 | -0.0482 | 0.0683 |
| 0.0229 | -0.16620 | -0.08070 | -0.1072 |
| -0.03190 | -0.1535 | -0.1019 | -0.1171 |
| -0.06920 | -0.1426 | -0.1152 | -0.1223 |
| -0.094 | -0.1331 | -0.1227 | -0.1242 |
| -0.1097 | -0.12480 | -0.1263 | -0.12380 |
| -0.1191 | -0.1174 | -0.1269 | -0.1218 |
| -0.1239 | -0.1106 | -0.1257 | -0.1188 |
| -0.1255 | -0.1044 | -0.1231 | -0.115 |
| -0.12480 | -0.09870 | -0.1196 | -0.1109 |
| -0.1227 | -0.0935 | -0.1155 | -0.1065 |
| -0.1195 | -0.08860 | -0.1111 | -0.1020 |
| -0.1157 | -0.084 | -0.1066 | -0.0975 |
| -0.1115 | -0.0796 | -0.1020 | -0.0931 |
| -0.107 | -0.0756 | -0.0974 | -0.0888 |
| -0.10250 | -0.0717 | -0.0930 | -0.08460 |
| -0.098 | -0.06810 | -0.08860 | -0.0805 |
| -0.0935 | -0.0646 | -0.0844 | -0.0766 |
Figure 8 (annual data)
| CPI inflation | M1 growth, lagged_2_years | |
|---|---|---|
| 1960 | 1.45797598627788 | #N/A |
| 1961 | 1.07072414764733 | #N/A |
| 1962 | 1.19877334820173 | -0.0712250712250672 |
| 1963 | 1.23966942148761 | 1.96008553100499 |
| 1964 | 1.27891156462594 | 2.4117441454037 |
| 1965 | 1.58516926383643 | 3.05460750853242 |
| 1966 | 3.01507537688444 | 3.82513661202186 |
| 1967 | 2.77278562259307 | 4.25837320574163 |
| 1968 | 4.27179615288533 | 4.60455866605475 |
| 1969 | 5.46238620028749 | 3.93389880081895 |
| 1970 | 5.83825533848259 | 6.97903475446743 |
| 1971 | 4.29276668813059 | 5.94502170195976 |
| 1972 | 3.27227824655281 | 3.8361266294227 |
| 1973 | 6.17776006377033 | 6.70731707317075 |
| 1974 | 11.0548048048047 | 7.12605042016807 |
| 1975 | 9.14314686496551 | 7.23773663842694 |
| 1976 | 5.74481263549074 | 5.00341363503364 |
| 1977 | 6.50168399472835 | 4.52349990711502 |
| 1978 | 7.63096383885604 | 5.63405314138449 |
| 1979 | 11.2544711292796 | 7.63018423487846 |
| 1980 | 13.5492019749684 | 8.22260434578707 |
| 1981 | 10.3347153402771 | 7.61952910587895 |
| 1982 | 6.13142700027496 | 6.21434803033353 |
| 1983 | 3.21243523316062 | 7.39874897327352 |
| 1984 | 4.30053547523424 | 6.59489351688435 |
| 1985 | 3.54564415209375 | 11.0822893095646 |
| 1986 | 1.89804772234277 | 7.05023103294082 |
| 1987 | 3.66456321751685 | 8.96686159844056 |
| 1988 | 4.07774110744406 | 13.5105204872647 |
| 1989 | 4.82700303008954 | 11.6060037523452 |
| 1990 | 5.39795643990315 | 4.19594526443199 |
| 1991 | 4.23496396453862 | 0.955116001419749 |
| 1992 | 3.02881967814965 | 3.63409722888103 |
| 1993 | 2.95165696638553 | 5.97396989884034 |
| 1994 | 2.60744159215462 | 12.4356101394022 |
| 1995 | 2.80541968853663 | 11.6529481803593 |
| 1996 | 2.93120419993433 | 6.19668026706232 |
| 1997 | 2.33768993730736 | -0.19428496583642 |
| 1998 | 1.55227909874374 | -3.16054243219598 |
| 1999 | 2.18802719697353 | -3.3156408808583 |
| 2000 | 3.37685727149932 | 0.978811876562279 |
| 2001 | 2.82617111885402 | 2.00111044278904 |
| 2002 | 1.58603162650608 | 0.12020593771972 |
| 2003 | 2.2700949733611 | 3.32548024646612 |
| 2004 | 2.67723669309179 | 4.90879593089539 |
| 2005 | 3.39274684549544 | 6.45336565589014 |
| 2006 | 3.22594410070407 | 5.56940654508335 |
| 2007 | 2.85267248150138 | 2.03436477238916 |
| 2008 | 3.83910029665098 | 0.191361399671952 |
Figure 9 data (annual data)
| M1 growth, per_unit_of_output | CPI inflation | |
|---|---|---|
| 1960 | -2.48569686645915 | 1.45797598627788 |
| 1961 | -0.362868538878802 | 1.07072414764733 |
| 1962 | -3.43816507784794 | 1.19877334820173 |
| 1963 | -1.26142884921724 | 1.23966942148761 |
| 1964 | -1.85535902668678 | 1.27891156462594 |
| 1965 | -2.03161147174943 | 1.58516926383643 |
| 1966 | -1.79363970553034 | 3.01507537688444 |
| 1967 | 1.37147014807586 | 2.77278562259307 |
| 1968 | 2.03823596058641 | 4.27179615288533 |
| 1969 | 2.75309791704923 | 5.46238620028749 |
| 1970 | 3.63914950450217 | 5.83825533848259 |
| 1971 | 3.24010902742431 | 4.29276668813059 |
| 1972 | 1.72330363821414 | 3.27227824655281 |
| 1973 | 1.36441500394893 | 6.17776006377033 |
| 1974 | 5.58534629408791 | 11.0548048048047 |
| 1975 | 4.74627773251393 | 9.14314686496551 |
| 1976 | 0.255064342361977 | 5.74481263549074 |
| 1977 | 2.89883522821666 | 6.50168399472835 |
| 1978 | 2.50611162997376 | 7.63096383885604 |
| 1979 | 4.35877684910988 | 11.2544711292796 |
| 1980 | 6.50539608111027 | 13.5492019749684 |
| 1981 | 4.74032857678783 | 10.3347153402771 |
| 1982 | 8.70649243970942 | 6.13142700027496 |
| 1983 | 6.27962131409054 | 3.21243523316062 |
| 1984 | -0.125947961209139 | 4.30053547523424 |
| 1985 | 4.63637823122123 | 3.54564415209375 |
| 1986 | 9.71108558151723 | 1.89804772234277 |
| 1987 | 8.14487927351459 | 3.66456321751685 |
| 1988 | 0.0822451703293314 | 4.07774110744406 |
| 1989 | -2.52702193494594 | 4.82700303008954 |
| 1990 | 1.72495641434831 | 5.39795643990315 |
| 1991 | 6.22253955288061 | 4.23496396453862 |
| 1992 | 8.74523763781332 | 3.02881967814965 |
| 1993 | 8.55751775881168 | 2.95165696638553 |
| 1994 | 2.03893543782101 | 2.60744159215462 |
| 1995 | -2.64176777840099 | 2.80541968853663 |
| 1996 | -6.65271252776268 | 2.93120419993433 |
| 1997 | -7.44034832569834 | 2.33768993730736 |
| 1998 | -3.23571684006344 | 1.55227909874374 |
| 1999 | -2.69500183320459 | 2.18802719697353 |
| 2000 | -3.85927347519766 | 3.37685727149932 |
| 2001 | 2.22185572183697 | 2.82617111885402 |
| 2002 | 3.03999733290543 | 1.58603162650608 |
| 2003 | 3.86680968376014 | 2.2700949733611 |
| 2004 | 1.92727148831264 | 2.67723669309179 |
| 2005 | -0.989916231831078 | 3.39274684549544 |
| 2006 | -2.41684761998012 | 3.22594410070407 |
| 2007 | -2.18041055493416 | 2.85267248150138 |
| 2008 | 3.61113735336778 | 3.83910029665098 |
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