On the Output Effects of Monetary Variability.

In this paper we provide an update regarding the effects of money growth variability on real economic activity in the United States using monthly data and the new CFS Divisia monetary aggregates, extending the work in Serletis and Shahmoradi (Macroecon Dyn 10:652-666 ) and Serletis and Rahman (Open Econ Rev 20:607-630 , Macroecon Dyn 17:1638-1658 ). We present evidence that increased uncertainty about the growth rate of the CFS Divisia M1, M2M, and M4+ monetary aggregates is associated with a lower average growth rate of real economic activity in the United States. We also argue that optimal monetary aggregation, as suggested over thirty years ago by Barnett (J Money Credit Bank 14:687-710 ), will further improve our understanding of how money affects the economy. [ABSTRACT FROM AUTHOR]