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An Evaluation of the Non-Neutrality of Money

This paper evaluates the effect of a change in the quantity of money on relative prices in the U.S. economy based on quarterly time-series for the period of 1959 to 2013. We also estimate the implication of a change in relative prices on the rate of inflation and macroeconomic variables. The empiric...

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Detalles Bibliográficos
Autores principales: Moreira, Tito Belchior Silva, Tabak, Benjamin Miranda, Mendonça, Mario Jorge, Sachsida, Adolfo
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Public Library of Science 2016
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4775059/
https://www.ncbi.nlm.nih.gov/pubmed/26934716
http://dx.doi.org/10.1371/journal.pone.0145710
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author Moreira, Tito Belchior Silva
Tabak, Benjamin Miranda
Mendonça, Mario Jorge
Sachsida, Adolfo
author_facet Moreira, Tito Belchior Silva
Tabak, Benjamin Miranda
Mendonça, Mario Jorge
Sachsida, Adolfo
author_sort Moreira, Tito Belchior Silva
collection PubMed
description This paper evaluates the effect of a change in the quantity of money on relative prices in the U.S. economy based on quarterly time-series for the period of 1959 to 2013. We also estimate the implication of a change in relative prices on the rate of inflation and macroeconomic variables. The empirical results indicate that the change of money supply not only affects relative prices but also affects the inflation rate and real variables, such as investment, natural rate of unemployment and potential GDP, through the change in relative prices. The relevant finding of our study is that money is not neutral in a non-traditional sense because a change in the money supply disturbs relative prices and, consequently, the allocation of resources in the economy. This finding has serious implications that must be considered in the transmission mechanisms of monetary policy.
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spelling pubmed-47750592016-03-10 An Evaluation of the Non-Neutrality of Money Moreira, Tito Belchior Silva Tabak, Benjamin Miranda Mendonça, Mario Jorge Sachsida, Adolfo PLoS One Research Article This paper evaluates the effect of a change in the quantity of money on relative prices in the U.S. economy based on quarterly time-series for the period of 1959 to 2013. We also estimate the implication of a change in relative prices on the rate of inflation and macroeconomic variables. The empirical results indicate that the change of money supply not only affects relative prices but also affects the inflation rate and real variables, such as investment, natural rate of unemployment and potential GDP, through the change in relative prices. The relevant finding of our study is that money is not neutral in a non-traditional sense because a change in the money supply disturbs relative prices and, consequently, the allocation of resources in the economy. This finding has serious implications that must be considered in the transmission mechanisms of monetary policy. Public Library of Science 2016-03-02 /pmc/articles/PMC4775059/ /pubmed/26934716 http://dx.doi.org/10.1371/journal.pone.0145710 Text en © 2016 Moreira et al http://creativecommons.org/licenses/by/4.0/ This is an open access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) , which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
spellingShingle Research Article
Moreira, Tito Belchior Silva
Tabak, Benjamin Miranda
Mendonça, Mario Jorge
Sachsida, Adolfo
An Evaluation of the Non-Neutrality of Money
title An Evaluation of the Non-Neutrality of Money
title_full An Evaluation of the Non-Neutrality of Money
title_fullStr An Evaluation of the Non-Neutrality of Money
title_full_unstemmed An Evaluation of the Non-Neutrality of Money
title_short An Evaluation of the Non-Neutrality of Money
title_sort evaluation of the non-neutrality of money
topic Research Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4775059/
https://www.ncbi.nlm.nih.gov/pubmed/26934716
http://dx.doi.org/10.1371/journal.pone.0145710
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