macroeconomics, econometricsWould it make sense to do a 2SLS regression for Nominal GDP and Money Supply (using predetermined variables of government expenditure and investment)?
If it does make theoretical sense, is this because GDP and Money Supply are endogenous? I am unsure why GDP is endogenous… For example if there is an increase in money supply, then I know there is an increased in GDP (since AD increases); however, I fail to see how an increase in GDP has a feedback effect and causes an increase in money supply.
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