Is money an omitted variable in the production function? some further results

Date
1993
Authors
Hasan, M. A.
Mahmud, S. F.
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Source Title
Empirical Economics
Print ISSN
0377-7332
Electronic ISSN
Publisher
Physica-Verlag
Volume
18
Issue
3
Pages
431 - 445
Language
English
Type
Article
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Abstract

In recent years, numerous studies have emphasized the role of real balances in the production function in terms of money being useful: as an intermediate good; as liquid reserves for investment; and also serving as a link between aggregate supply and the nominal interest rate. In this paper we report new Canadian empirical evidence regarding the important role of money in the production process of aggregate manufacturing industries based on a flexible translog cost function approach. In general, our results support the hypothesis that money is an important factor in the production function and that there are potential supply side effects of a change in the interest rate. © 1993 Physica-Verlag.

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Keywords
E41
Citation
Published Version (Please cite this version)