The application of cointegration and error correction methodology to estimate aggregate consumption equations relating consumer spending to labor income and household wealth shows unequivocally that wealth has significant effect on consumer spending. Still, the long-term marginal propensity to...

An error-correction model is used to study the long- and short-run determinants of U.S. demand for M2. The money demand function presented here exhibits parameter stability and predicts quite well the actual behavior of M2 growth in the 1980s

An equation explaining the long-run behavior of the bond rate from 1971 to 1993 indicates that inflation is the main long-run economic determinant of the bond rate. Monetary policy actions have short-run but no long-run effects on the rate. During the subperiod 1979 to 1993, however, some...

The main implication of the Quantity Theory of Money is that long-run movements in the price level are determined primarily by long-run movements in the excess of money over real output. This implication is related to the concept of cointegration discussed in Granger (1986), which states...