Sources of change in the Canadian money stock, 1955-65

Abstract

72 1024x768 The nominal stock of money can be expressed as the product of a monetary or reserve base determined by the monetary authorities and a money multiplier whose terms reflect the asset preferences of the chartered banking system and the non-bank public. The present article quantifies the contributions of the multiplier and the base to changes in the Canadian money stock for the period 1955-65. It then attributes the changes in the constituent ratios observed movements of the money multiplier. The data indicate that while changes in the monetary base are the predominant source of change in the money stock in the long run, in the short run changes in the money multiplier play a large role and may occasionally overshadow changes in the base. Normal 0 14 /* Style Definitions */ table.MsoNormalTable {mso-style-name:Tabella normale; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:; mso-padding-alt:0pt 5.4pt 0pt 5.4pt; mso-para-margin:0pt; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:Times New Roman;}