ABSTRACT
This chapter discusses extensive empirical studies of the relation between the stock of money and economic activity. It summarizes some of the results in a paper submitted to the Joint Economic Committee, in subsequent testimony before that committee, and in a series of lectures on monetary policy. The central empirical finding in dispute is conclusion that monetary actions affect economic conditions only after a lag that is both long and variable. A two-way relation between monetary change and business conditions is, indeed, one reason why the lag in the effect of monetary action might be expected to be long and variable. The rate of change of business is a second derivative of a stock comparable dimensionally not to the rate of change of money stock but to the second derivative of the money stock. The chief statistical consideration is the problem of allowing for trend.
