@article{TheRelationshipBetweenMoney:660,
      recid = {660},
      author = {Caramazza, Francesco and Slawner, Chad},
      title = {The Relationship Between Money, Output and Prices},
      publisher = {Bank of Canada},
      address = {1991},
      pages = {1 online resource (38 pages)},
      abstract = {This paper has two main aims. First, to evaluate the  robustness of the method used to detrend the data of  previous results concerning the lead/lag relationships  among money, output and prices in Canada and the  information content of monetary aggregates. If the results  are insensitive to the detrending procedure, then one can  be more confident that the observed correlations reflect  underlying relationships among the variables. Second, to  examine whether deviations of money from its long-run  equilibrium value -that is, from the relationship that ties  together the levels of money, output, prices and other  variables in the long run - contains useful information  about future output growth and inflation. If such a  long-run relationship exists, then models that do not take  it into account may be misspecified. The results confirm  the significant role of the monetary aggregates in  predicting changes in real GDP and prices found in previous  studies. The information content of money, particularly the  leading indicator properties of Ml with respect to real GDP  and ofM2 with respect to prices, is not sensitive to the  method used to detrend the data. It is also found that  deviations of M2 from its long-run equilibrium value  contain information about future inflation in addition to  that contained in lagged inflation, lagged M2 growth and an  output gap. The results suggest that the inflation process  is related to developments in both the money market and the  goods market.},
      url = {http://www.oar-rao.bank-banque-canada.ca/record/660},
      doi = {https://doi.org/10.34989/swp-1991-4},
}