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Is Inflation Always and Everywhere a Monetary Phenomenon?

  • Paul De Grauwe
  • Magdalena Polan

Using a sample of about 160 countries over the last 30 years, we test for the quantity theory relationship between money and inflation. When analysing the full sample of countries, we find a strong positive relation between long-run inflation and the money growth rate. The relation is not proportional, however. The strong link between inflation and money growth is almost wholly due to the presence of high-(or hyper-) inflation countries in the sample. The relationship between inflation and money growth for low-inflation countries (on average less than 10% per annum over the last 30 years) is weak. Copyright The editors of the "Scandinavian Journal of Economics", 2005 .

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Article provided by Wiley Blackwell in its journal The Scandinavian Journal of Economics.

Volume (Year): 107 (2005)
Issue (Month): 2 (06)
Pages: 239-259

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Handle: RePEc:bla:scandj:v:107:y:2005:i:2:p:239-259
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