Money Growth, Output Growth, and Inflation: Estimation of a Modern Quantity Theory
This paper develops a long-run version of the quantity theory of money growth, real GDP growth, and inflation. Inflation rates, averaged for the years 1980–1993, are computed for 81 countries. These cross-section inflation rates are explained almost entirely by average M2 growth rates. In countries marked by high money growth and inflation, the estimated coefficients of M2 growth are strikingly close to one, strongly confirming the quantity theory. By contrast, in countries with relatively low money growth and inflation, the estimated money growth coefficient is only 0.69; the quantity theory offers a less complete explanation of inflation. Money growth and GDP growth are nearly orthogonal, consistent with long-run monetary superneutrality. The quantity theory is a reliable model of inflation for most countries, but not for those experiencing slow long-run money growth.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Volume (Year): 69 (2002)
Issue (Month): 2 (October)
|Contact details of provider:|| Web page: http://www.southerneconomic.org/|
More information through EDIRC