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Inflation and monetary regimes

  • Dwyer, Gerald P.
  • Fisher, Mark

Correlations of inflation with the growth rate of money increase when data are averaged over longer time periods. Correlations of inflation with the growth of money also are higher when high inflation as well as low-inflation countries are included in the analysis. We show that serial correlation in the underlying inflation rate ties these two observations together and explains them. We present evidence that averaging increases the correlation of inflation and money growth in more when the underlying inflation rate has higher serial correlation.

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Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 28 (2009)
Issue (Month): 7 (November)
Pages: 1221-1241

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Handle: RePEc:eee:jimfin:v:28:y:2009:i:7:p:1221-1241
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  1. Paul De Grauwe & Magdalena Polan, 2005. "Is Inflation Always and Everywhere a Monetary Phenomenon?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(2), pages 239-259, 06.
  2. Gerald P. Dwyer & R. W. Hafer, 1988. "Is money irrelevant?," Review, Federal Reserve Bank of St. Louis, issue May, pages 3-17.
  3. Arthur J. Rolnick & Warren E. Weber, 1998. "Money, inflation, and output under fiat and commodity standards," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 11-17.
  4. Lothian, James R, 1985. "Equilibrium Relationships between Money and Other Economic Variables," American Economic Review, American Economic Association, vol. 75(4), pages 828-35, September.
  5. 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.
  6. Lucas, Robert E, Jr, 1980. "Two Illustrations of the Quantity Theory of Money," American Economic Review, American Economic Association, vol. 70(5), pages 1005-14, December.
  7. 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.
  8. George T. McCandless & Warren E. Weber, 1995. "Some monetary facts," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Sum, pages 2-11.
  9. N. Kundan Kishor & Levis A. Kochin, 2007. "The Success Of The Fed And The Death Of Monetarism," Economic Inquiry, Western Economic Association International, vol. 45(1), pages 56-70, 01.
  10. John R. Moroney, 2002. "Money Growth, Output Growth, and Inflation: Estimation of a Modern Quantity Theory," Southern Economic Journal, Southern Economic Association, vol. 69(2), pages 398-413, October.
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