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Government Deficits and Money Growth

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  • Landon, Stuart
  • Reid, Bradford G

Abstract

Additional empirical evidence is provided concerning the impact of government financing decisions on monetary expansion in the United States for the post-World War II period. The budget position of the fiscal authority and the rate of money growth set by the Fed are specified as endogenous variables within a system of equations. The empirical analysis generates evidence of a policy shift in the 1980s, with budget deficits exerting no independent influence on high-powered money growth prior to 1981 while, after 1981, such a linkage is found to exist. Copyright 1990 by MIT Press.

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  • Landon, Stuart & Reid, Bradford G, 1990. "Government Deficits and Money Growth," The Review of Economics and Statistics, MIT Press, vol. 72(3), pages 382-389, August.
  • Handle: RePEc:tpr:restat:v:72:y:1990:i:3:p:382-89
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    Cited by:

    1. Oseni Isiaq Olasunkanmi & Sanni Hauwa Yetunde, 2016. "Does Fiscal Deficit Granger Cause Impulsiveness in Inflation Rate in Nigeria?," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, pages 208-216.
    2. Hemantha K.J. Ekanayake, 2012. "The Link Between Fiscal Deficit and Inflation: Do public sector wages matter?," ASARC Working Papers 2012-14, The Australian National University, Australia South Asia Research Centre.

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