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April 13, 2011

Mankiw posts on the money multiplier

The money multiplier describes the relationship between monetary base and the money supply. One of the big questions is what has become of the money multiplier. Realize that it has been falling for a long time . . . but in the last few years it has behaved very peculiarly. See    http://www.nakedcapitalism.com/2010/03/guest-post-m1-money-multiplier-still-crashing-each-1-increase-in-monetary-base-results-in-only-79-cent-increase-in-money-supply.html

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