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Published byPaulina Little Modified over 9 years ago
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Money Still Matters AEI Panel March 22, 2013 David Beckworth, Western Kentucky University
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Money Lessons Learned Traditional View of Money too Narrow o Retail Money Assets Cash, checking accounts, saving and time deposits, money market accounts o Institutional Money Assets Treasury bills, MBS, commercial paper, repos
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Money Supply
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Money Demand
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Long-Term Interest Rates
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Recap Supply of Safe Assets Decreased Demand for Safe Assets Increased Safe Asset Shortage Transaction Asset or Money Shortage Shortfall of Total Dollar Spending
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Role for Fed Policy Return Total Dollar Spending to Pre-crisis Growth Path o Demand for financial intermediation will increase o Private safe asset production will increase Don’t Target Money Supply o Even though money still matters… o Stable NGDP growth implies stable monetary conditions
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Role for Fed Policy
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Vector Autoregression 1968:Q4-2012:Q4 Quarters After Positive Shock to Expected NGDP Growth Rate
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