TITLE:
A Simultaneous-Equation Model of Money Demand and Money Supply for Canada
AUTHORS:
Yu Hsing, Abul M. M. Jamal
KEYWORDS:
Money Demand; Money Supply; Three-Stage Least Squares
JOURNAL NAME:
Modern Economy,
Vol.4 No.1,
January
30,
2013
ABSTRACT:
We estimate the money demand function and the money supply function for Canadasimultaneously by the three-stage least squares method. The inflation gap and the output gap are incorporated in the money supply function. Real money demand is positively affected by real GDP and negatively associated with the Treasury bill rate and the nominal effecttive exchange rate. Real money supply is positively influenced by the Treasury bill rate and negatively impacted by the inflation gap and the output gap.