MONEY AND BUSINESS CYCLES IN THE UNITED-STATES, 1870 TO 1913 - A REEXAMINATION OF FRIEDMAN AND SCHWARTZ

The empirical relationship between money and output during the period 1870 to 1913 is reexamined using newly developed output series and recent statistical techniques for decomposing time series into trend and cyclical components. Multivariate models relating the cyclical components of money and output are then built, the results from which show support for those of Friedman and Schwartz, with strong evidence of both the monetary base and broad money Granger-causing output, with there also being a clear feedback from output to money. © 1992.