A multiplier model for controlling the money stock

Büttler, Hans-Jürg; Gorgerat, J.-F.; Schiltknecht, H.; Schiltknecht, Kurt

doi:10.1016/0304-3932(79)90032-1

Cited by 20 publications

(6 citation statements)

References 2 publications

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“…The same exercise was carried out using Swiss data by Buttler et al (1979), who concluded that the money multiplier could be predicted reliably. Frantianni & Nabli (1979) did the same for seven European countries.…”

Section: A Quick Look At the Literaturementioning

confidence: 95%

Direct and indirect forecasting of the money multiplier and velocity of circulation in the United Kingdom

Moosa

Kim

2004

International Economic Journal

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This paper compares the direct and indirect methods of predicting the money multiplier and velocity of circulation in the UK economy. Forecasts are generated using the autoregressive (AR) model and Harvey's structural time series model. In addition to point forecasts, prediction intervals (calculated by using the recently proposed bootstrap-after-bootstrap) are used for comparing forecasting accuracy. The results turn out to be mixed but the overall evidence seems to be in favour of the direct method. It is suggested that this may be due to the pooling of time series (as implied by the definition), which reduces the noise associated with individual time series.JEL Classification: E5, Autoregressive model, bootstrap, Harvey's Structural Time Series Model,

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Section: A Quick Look At the Literaturementioning

confidence: 95%

Direct and indirect forecasting of the money multiplier and velocity of circulation in the United Kingdom

Moosa

Kim

2004

International Economic Journal

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“…He used the time-series technique for the United States and the Netherlands. Büttler et al (1979) and Fratianni and Nabli (1979) also used this technique to forecast the money multiplier in Switzerland and in seven EEC countries respectively. Johannes and Rasche (1979) further extended the time-series approach to the components of money multiplier.…”

Section: Review Of Literaturementioning

confidence: 99%

Predicting Money Multiplier in Pakistan

Arby¹

2022

pdr

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The paper has developed time-series models for the monthly money multiplier and its components, viz., currency-deposit ratio, reserve-deposit ratio, etc. A comparison is made between the predictive performance of the aggregate multiplier and the component models. It is found that the projected values of the multiplier on the basis of the aggregate model are closer to actual values as compared to those worked out on the basis of the component models. Thus, for the purposes of projecting the money multiplier, it may be preferable to focus on the aggregate money multiplier model. Stability tests, applied to the identified models for each component and the overall multiplier, suggest that all the models are stable.

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“…Empirical work on the standard money multiplier has broadly followed three main strands[11]. The first strand relates to work conducted, inter alia , by Burger et al (1971), Burger (1972), Bomhoff (1977), DeRosa and Stern (1977), Johannes and Rasche (1979), Buttler et al (1979), Fratianni and Nabli (1979), Hafer et al (1983) and Hafer and Hein (1984). These studies develop alternative models for forecasting the multiplier.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The multiplier forecast model he tests incorporates the lagged percentage change in the Treasury bill rate instead of the reserve adjustment magnitude. Subsequent studies carried out by Bomhoff (1977), DeRosa and Stern (1977), Johannes and Rasche (1979), Buttler et al (1979) and Fratianni and Nabli (1979) apply aggregate time series and component models to forecast the multiplier. Employing the Box–Jenkins (BJ) method, Bomhoff (1977) finds that his forecasts of the US M1 multiplier are approximately 30 per cent more accurate than those reported in the earliest studies.…”

Section: Literature Reviewmentioning

confidence: 99%

The existence of a stable money multiplier in the small open economy of Kazakhstan

Bhatti

Khawaja

2018

JES

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Purpose The purpose of this paper is to examine whether a long-run stable money multiplier exists in Kazakhstan. It also investigates whether different episodes of currency shocks, including the financial crisis and recession of 2008–2010, have affected the working of the money multiplier in Kazakhstan. Design/methodology/approach The long-run multiplier is tested employing three cointegration tests: Engle–Granger (1987), Phillips–Ouliaris (1990) and Johansen and Juselius (1990). Findings The results of cointegration and coefficient restrictions tests are consistent with the money multiplier when broad money (M2 and M3) is used rather than when narrow money (M1) is used. The relationship between broad money and monetary base is structurally stable when examined on the basis of a dynamic (an error-correction) model. However, the M2 multiplier performs better than the M3 multiplier. Research limitations/implications This paper is restricted to testing a mechanistic version of the money multiplier and its stability using both narrow (M1) and broad money (M2 and M3) supplies. Thus, the paper focusses on the money view of the multiplier rather than the credit view of the multiplier. Practical implications One implication that emerges from the findings of this paper is that the National Bank of Kazakhstan can control M2 by controlling the monetary base, and hence the latter can serve as an indicator for monetary policy. Social implications The validity of the money multiplier implies that monetary policy can be conducted to control the money supply and the provision of bank credit to private sector to stabilize economic activity, thereby leading towards social stability in the economy as well. Originality/value In addition to offering a coherent survey of the literature on the standard money multiplier, this paper is a first attempt to find a stable money multiplier for Kazakhstan.

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A multiplier model for controlling the money stock

Cited by 20 publications

References 2 publications

Direct and indirect forecasting of the money multiplier and velocity of circulation in the United Kingdom

Direct and indirect forecasting of the money multiplier and velocity of circulation in the United Kingdom

Predicting Money Multiplier in Pakistan

The existence of a stable money multiplier in the small open economy of Kazakhstan

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