ABSTRACT
Milton Friedman and Anna Schwartz opened up the study of the monetary history of the United States. A product of that work was their Monetary Statistics of the United States. The analytical framework in which the growth of the stock of money is examined follows that of Cagan. The money stock is viewed as having three proximate determinants: high powered money; the non-bank public's cash/deposit ratio, which determines the distribution of the stock of monetary base; and the banking system's reserve ratio, which shows the banking system's preferred holdings of cash relative to deposits. The framework outlined is regarded in the first instance then as a convenient accounting one. There are also analytical advantages. It yields time series whose variances and covariances with other series can be explored for example it is possible to measure 'predictability' in a statistical sense.
