What do these results suggest about the importance

Reference no: EM133287932

By definition, we can write the money supply M1 as M1 = M1/Base ∗ Base/Res ∗ Res/PGold ∗ QGold ∗ (PGold ∗ QGold).

where Base is the monetary base and Res the amount of reserves. Calculate the variance of the log of each component over time. Then report the ratio of the variance of each component relative to the variance of the log of M1. Which of these components are more volatile relative to M1? What do these results suggest about the importance of the gold standard in determining short-run fluctuations in the money supply? Note: The necessary data are only available for Belgium, France, Poland, Sweden, UK, and US.

Reference no: EM133287932

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