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Money, inflation, and output under fiat and commodity standards

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  • Arthur J. Rolnick
  • Warren E. Weber

Abstract

This study examines the behavior of money, inflation, and output under fiat and commodity standards to better understand how changes in monetary policy affect economic activity. Using long-term historical data for 15 countries, the study finds that the growth rates of various monetary aggregates are more highly correlated with inflation and with each other under fiat standards than under commodity standards. Money growth, inflation, and output growth are also higher under fiat standards. In contrast, the study does not find that money growth is more highly correlated with output growth under one type of standard than under the other. This study was originally published in the Journal of Political Economy (December 1997, vol. 105, no. 6, pp. 1308_21). It is reprinted in the Federal Reserve Bank of Minneapolis Quarterly Review with the permission of the University of Chicago Press.

Suggested Citation

  • Arthur J. Rolnick & Warren E. Weber, 1998. "Money, inflation, and output under fiat and commodity standards," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 22(Spr), pages 11-17.
  • Handle: RePEc:fip:fedmqr:y:1998:i:spr:p:11-17:n:v.22no.2
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    References listed on IDEAS

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    7. Smith, Bruce D, 1985. "Some Colonial Evidence on Two Theories of Money: Maryland and the Carolinas," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1178-1211, December.
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    10. George T. McCandless & Warren E. Weber, 1995. "Some monetary facts," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 19(Sum), pages 2-11.
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