Are money growth and inflation still related?
AbstractDespite the long history and the substantial evidence supporting the conclusion that persistent changes in the price level are associated with changes in the money supply, the predicted association remains dis-puted. Is it debated because the empirical relationship holds over time periods so long that it may be uninformative for practitioners and policymakers, who are more concerned about inflation next month or next year? If it takes a generation for the relationship between money growth and inflation to become apparent, it would not be surprising that central bankers and practitioners put little weight on recent money growth. ; It is not clear, though, that it takes a generation. The authors of this article reconsider the link between money growth and inflation, using two types of evidence. The first, based on the behavior of five countries' price levels and money stocks over much of the twentieth century, provides a perspective over time. The second uses two recent five-year periods for a number of countries for which collecting comparable data covering long periods is not feasible. A positive, proportional relationship between the price level and money relative to real income is evident in data over long periods of time and over shorter periods for many countries. ; Does the behavior of inflation justify ignoring money growth when attempting to estimate future inflation? The evidence in this article indicates not.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Federal Reserve Bank of Atlanta in its journal Economic Review.
Volume (Year): (1999)
Issue (Month): Q2 ()
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Abdul Qayyum, 2006.
"Money, Inflation, and Growth in Pakistan,"
The Pakistan Development Review,
Pakistan Institute of Development Economics, vol. 45(2), pages 203-212.
- John C. Frain, 2004.
"Inflation and Money Growth - Evidence from a Multi-Country Data-Set,"
The Economic and Social Review,
Economic and Social Studies, vol. 35(3), pages 251-266.
- Frain, John C., 2003. "Inflation and Money Growth: Evidence from a Multi-Country Data-Set," Research Technical Papers 7/RT/03, Central Bank of Ireland.
- Levent, Korap, 2008. "Long-run relations between money, prices and output: the case of Turkey," MPRA Paper 20265, University Library of Munich, Germany.
- Kulaksizoglu, Tamer & Kulaksizoglu, Sebnem, 2009. "The U.S. Excess Money Growth and Inflation Relation in the Long-Run: A Nonlinear Analysis," MPRA Paper 23780, University Library of Munich, Germany.
- Hafer, R. W. & Kutan, Ali M., 2001.
"Detrending and the money-output link: International evidence,"
ZEI Working Papers
B 19-2001, ZEI - Center for European Integration Studies, University of Bonn.
- R. W. Hafer & Ali M. Kutan, 2002. "Detrending and the Money-Output Link: International Evidence," Southern Economic Journal, Southern Economic Association, vol. 69(1), pages 159-174, July.
- António Afonso, 2002.
"Disturbing the Fiscal Theory of the Price Level: Can it Fit the EU-15,"
2002/01, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon..
- António Afonso, 2002. "Disturbing the fiscal theory of the price level: Can it fit the eu-15?," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 B4-3, International Conferences on Panel Data.
- Michael Graff, 2008. "The Quantity Theory of Money in Historical Perspective," KOF Working papers 08-196, KOF Swiss Economic Institute, ETH Zurich.
- Basco, Emiliano & D'Amato, Laura & Garegnani, Lorena, 2009. "Understanding the money-prices relationship under low and high inflation regimes: Argentina 1977-2006," Journal of International Money and Finance, Elsevier, vol. 28(7), pages 1182-1203, November.
- Levent, Korap, 2009. "The search for co-integration between money, prices and income: low frequency evidence from the Turkish economy," MPRA Paper 19557, University Library of Munich, Germany.
- Claude Hillinger & Bernd Süssmuth & Marco Sunder, 2012. "The Quantity Theory of Money and Friedmanian Monetary Policy: An Empirical Investigation," CESifo Working Paper Series 3754, CESifo Group Munich.
- Emiliano Basco & Laura D´Amato & Lorena Garegnani, 2006. "Understanding the Money-Prices Relationship Under Low and High Inflation Regimes: Argentina 1970-2005," BCRA Working Paper Series 200613, Central Bank of Argentina, Economic Research Department.
- Hillinger, Claude, 2010.
"The crisis and beyond: Thinking outside the box,"
Economics - The Open-Access, Open-Assessment E-Journal,
Kiel Institute for the World Economy, vol. 4(23), pages 1-61.
- Paun, Cristian & Topan, Vladimir, 2013. "The Monetary Causes of Inflation in Romania," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 5-23, March.
- De Grauwe, Paul & Polan, Magdalena, 2001. "Is Inflation Always and Everywhere a Monetary Phenomenon?," CEPR Discussion Papers 2841, C.E.P.R. Discussion Papers.
- James R. Lothian & Cornelia H. McCarthy, 2003.
"The Behavior of Money and Other Economic Variables: Two Natural Experiments,"
- Lothian, James R. & McCarthy, Cornelia H., 2009. "The behavior of money and other economic variables: Two natural experiments," Journal of International Money and Finance, Elsevier, vol. 28(7), pages 1204-1220, November.
- Hillinger, Claude & SÃ¼ssmuth, Bernd, 2008. "The Quantity Theory of Money is Valid. The New Keynesians are Wrong!," Discussion Papers in Economics 6987, University of Munich, Department of Economics.
- Jürgen von Hagen, 2004. "Hat die Geldmenge ausgedient?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 5(4), pages 423-453, November.
- Thomas M Fullerton Jr & Roberto Tinajero, 2004. "Short-Run Price Dynamics in Mexico," Macroeconomics 0407027, EconWPA.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Diane Rosenberger).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.