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Effects on Inflation of Loanable Funds and M1

In: Why Fiscal Stimulus Programs Fail, Volume 1

Author

Listed:
  • John J. Heim

    (State University of New York)

Abstract

This chapter tests the relationship of inflation to changes in M1 and loanable funds in Phillips curve inflation models. M1 was found significantly related to inflation, but not loanable funds or either of its two components, even though we show changes in LF are positively and significantly related to changes in M1. The lack of relationship appears to be an econometric problem related to adding variances, not a substantive finding. Evidence indicated M1 growth was most consistently driven by changes in the exogenous part (FR purchases) of LF, but less systematically to growth in the endogenous part.

Suggested Citation

  • John J. Heim, 2021. "Effects on Inflation of Loanable Funds and M1," Springer Books, in: Why Fiscal Stimulus Programs Fail, Volume 1, chapter 0, pages 491-506, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-65675-1_23
    DOI: 10.1007/978-3-030-65675-1_23
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    Cited by:

    1. Robert Brooks & Brandon N. Cline & Pavel Teterin & Yu You, 2022. "The information in global interest rate futures contracts," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 42(6), pages 1135-1166, June.

    More about this item

    Keywords

    M1; Money supply; Inflation; Loanable funds; Federal reserve; Securities purchases;
    All these keywords.

    JEL classification:

    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration

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