Comparison Between Economy of US VS Canada

Abstract

This essay presents an in-depth analysis of the relationship between the money supply and the price level (cpi) in the us and Canadian economies. The study utilizes basic linear regression and var analysis to identify significant positive relationships between the money supply and the price level in both economies. however, distinct dynamics emerge in the impulse response analysis, revealing that the us economy is more sensitive to changes in the money supply, with a persistent influence on inflation over time, while the Canadian economy exhibits inflationary pressures without a statistically significant impact of the lagged money supply on current levels. Furthermore, the essay investigates the demand for money by conducting regression analysis, highlighting the significant impact of income and interest rates on the demand for money in both countries. in the context of independence/dependence, the research shows that real income and nominal interest rates have a positive and negative relationship, respectively, with the demand for money in both economies. the implications of the findings have economic ramifications for both the us and Canadian economies, emphasizing the importance of policymakers closely monitoring changes in the money supply due to their significant impact on the price level. Additionally, fostering higher income levels and lower interest rates should be prioritized to stimulate economic growth in both countries. While the analysis provides valuable insights, it acknowledges limitations in terms of long-term trends and the influence of unaccounted factors on the relationships between variables. nevertheless, the essay suggests that current policies should focus on promoting economic growth, particularly in the us economy, with continuous vigilance on the effects of changes in the money supply. The essay concludes by calling for future research to explore long-term trends and the impact of other factors on the studied relationships. it also recommends investigating the effects of economic growth policies on the demand for money and the connection between the money supply and price levels to further enrich the understanding ofmonetary dynamics in the us and Canadian economies.