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Money Still Matters AEI Panel March 22, 2013 David Beckworth, Western Kentucky University
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Money Still Matters AEI Panel March 22, 2013 David Beckworth, Western Kentucky University.

Dec 16, 2015

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Page 1: Money Still Matters AEI Panel March 22, 2013 David Beckworth, Western Kentucky University.

Money Still MattersAEI Panel

March 22, 2013David Beckworth, Western Kentucky

University

Page 2: Money Still Matters AEI Panel March 22, 2013 David Beckworth, Western Kentucky University.

Money Lessons Learned

• Traditional View of Money too NarrowoRetail Money Assets• Cash, checking accounts, saving and time deposits, money market accounts

o Institutional Money Assets• Treasury bills, MBS, commercial paper, repos

Page 3: Money Still Matters AEI Panel March 22, 2013 David Beckworth, Western Kentucky University.

Money Supply

Page 4: Money Still Matters AEI Panel March 22, 2013 David Beckworth, Western Kentucky University.

Money Supply

Page 5: Money Still Matters AEI Panel March 22, 2013 David Beckworth, Western Kentucky University.

Money Supply

Page 6: Money Still Matters AEI Panel March 22, 2013 David Beckworth, Western Kentucky University.

Money Supply

Page 7: Money Still Matters AEI Panel March 22, 2013 David Beckworth, Western Kentucky University.

Money Demand

Page 8: Money Still Matters AEI Panel March 22, 2013 David Beckworth, Western Kentucky University.

Money Demand

Page 9: Money Still Matters AEI Panel March 22, 2013 David Beckworth, Western Kentucky University.

Long-Term Interest Rates

Page 10: Money Still Matters AEI Panel March 22, 2013 David Beckworth, Western Kentucky University.

Recap• Supply of Safe Assets Decreased• Demand for Safe Assets

Increased• Safe Asset Shortage • Transaction Asset or Money

Shortage• Shortfall of Total Dollar Spending

Page 11: Money Still Matters AEI Panel March 22, 2013 David Beckworth, Western Kentucky University.
Page 12: Money Still Matters AEI Panel March 22, 2013 David Beckworth, Western Kentucky University.

Role for Fed Policy• Return Total Dollar Spending to

Pre-crisis Growth PathoDemand for financial intermediation

will increaseoPrivate safe asset production will

increase

• Don’t Target Money SupplyoEven though money still matters…oStable NGDP growth implies stable

monetary conditions

Page 13: Money Still Matters AEI Panel March 22, 2013 David Beckworth, Western Kentucky University.

Role for Fed Policy

Page 14: Money Still Matters AEI Panel March 22, 2013 David Beckworth, Western Kentucky University.

Vector Autoregression1968:Q4-2012:Q4

Quarters After Positive Shock to Expected NGDP Growth Rate