Omitted Variables in Equations Relating Prices to Money.
This paper considers some of the conditions under which an estimated 'reduced form' equation relating retail prices solely to past values of sterling M3 would provide a reliable guide to the past relationship between these two variables. The equation does not appear to be biased by innovations in real output. However, when overseas variables are included in the reduced form the estimated relationship between money an prices chages significantly. This suggests that the estimated parameters in ...Expand abstract
- Publisher copy:
- Copyright date: