Why do many economists believe that money affects output? What is the empirical evidence in support of that belief?

What will be an ideal response?

Except for the classical (RBC) model of the economy, other models provide theoretical reasons for the effect of money on output. These include the misperceptions theory, which finds that unanticipated changes in money growth influence output, and the Keynesian theory, which shows that the failure of prices to adjust to return the economy to equilibrium leads money to affect output. Friedman and Schwartz looked at historical episodes in which independent changes in the money supply led to changes in output. This is supported by the work of Romer and Romer, who reviewed and updated the Friedman and Schwartz analysis, and the Volcker episode in the early 1980s.