Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/80770
Authors: 
Kichian, Maral
Year of Publication: 
2012
Series/Report no.: 
Bank of Canada Working Paper 2012-33
Abstract: 
We propose a drifting-coefficient model to empirically study the effect of money on output growth in Canada and to examine the role of prevailing financial conditions for that relationship. We show that such a time-varying approach can be a useful way of modelling the impact of money on growth, and can partly reconcile the lack of concensus in the literature on the question of whether money affects growth. In addition, we find that credit conditions also play a role in that relationship. In particular, there is an additional negative short-run impact of money on growth when credit is not readily available, supporting the precautionary motive for holding money. Finally, money is found to have no effect on output growth in the long-run.
Subjects: 
Monetary aggregates
Credit and credit aggregates
Business fluctuations and cycles
JEL: 
E44
E51
Document Type: 
Working Paper

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