Sims [20] provided evidence of a unidirectional causal relationship running from the money supply to nominal income with U. S. data, by a statistical test now called Sims's test. However, Williams, Goodhart, and Gowland [21] derived an ambiguous result using U. K. data, namely, the possibility of a weak unidirectional causal relationship running from income to money. To resolve these apparently inconsistent findings, Putnam and Wilford [18] considered the role of the pound and the dollar in the world market. That is, the U. S. can control its own money supply since the dollar serves as a reserve currency under a fixed exchange rate regime, while the U. K. cannot since the price level in the U. K. is determined in the world market and the U. K. money supply is adjusted accordingly as individuals in the U. K. seek to maintain their equilibrium money balances. Thus, according to their analysis, it is only in the U. S. that money can cause income, while in other countries money and income are simultaneously determined. Further, testing Mundell's theoretical implication [12] that policy cannot affect income, but rather income fluctuations produce accommodating monetary flows, [11, 24] Mills and Wood found a unidirectional causal relationship running from income to money for the U. K. for the gold standard period 1870-1914.1 On the other hand, Mehra [9] examined the causal relationship among the variables of the money demand equation. While real money demand is exogenously explained by distributed lags of real income and interest rates, the results indicate no conclusive relationship among nominal money demand, nominal income, interest rates, and price. As a result, he reaffirms the usual practice of inferring the causal structure between two variables within the bivariate distributed-lag framework. [6, 228]