Sims's finding that nominal money stock is strictly exogenous in a distributed-lag regression of nominal income on nominal money stock is not inconsistent with the appearance and real income and nominal interest rates as strictly exogenous regressors in the quarterly money-demand equations estimated in real form. This strict exogeneity of real income and interest rates in real money-demand equations is due to the restriction implied by estimation in the real form, and these implicit restrictions seem to conflict with the sample information.

Sims's finding that nominal money stock is strictly exogenous in a distributed-lag regression of nominal income on nominal money stock is not inconsistent with the appearance and real income and nominal interest rates as strictly exogenous regressors in the quarterly money-demand equations estimated in real form. This strict exogeneity of real income and interest rates in real money-demand equations is due to the restriction implied by estimation in the real form, and these implicit restrictions seem to conflict with the sample information.

Using recently developed statistical techniques for examining the causal patterns between two variables within a bivariate distributed lag system, it is shown that, for the U.S. historical sample period 1954-70, money wages and consumer prices are simultaneously determined. This bidirectional feedback structure between wages and prices appears very strongly at the manufacturing level, though there is some evidence that such a structure does hold at the industry level, too. The structure of the casual patterns observed between industry money wages and prices for this sample period is not related to the industry market structure.

Using recently developed statistical techniques for examining the causal patterns between two variables within a bivariate distributed lag system, it is shown that, for the U.S. historical sample period 1954-70, money wages and consumer prices are simultaneously determined. This bidirectional feedback structure between wages and prices appears very strongly at the manufacturing level, though there is some evidence that such a structure does hold at the industry level, too. The structure of the casual patterns observed between industry money wages and prices for this sample period is not related to the industry market structure.