Predicting nominal GNP and testing the variability of the domestic money stock against M1

Abstract

A proposal was made by Albert Burger and Anatol Balbach to measure the money stock by excluding foreign holdings of U. S. dollars. This measure termed "domestic money stock" was tested against Ml to observe which was the least variable and which would predict GNP with the least error. The test were conducted by using Leonall Andersen's "monetary model of nominal income determination." The final results showed that due to the closeness in the percentage change of the two measures of the money stock, that little if any of the two measures had different values for variability, and both predicted nominal GNP with the same error.