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Supply of Money and Food Prices: A Time Series Analysis


  • Nikolaos Ziotis

    (Department of Agricultural Economics & Rural Development, Agricultural University of Athens, Greece)

  • Christos T. Papadas

    () (Department of Agricultural Economics & Rural Development, Agricultural University of Athens, Greece)


Relationships between monetary variables and price indices continue always to be the subject of research interest and studies. This paper examines the relationship between money supply and retail food prices in Greece, using individual time series of monthly data for these variables. ADF unit root testing shows that both series are non stationary at their levels. However, the series are stationary at their first differences and further analysis shows that the two I(1) variables are cointegrated, having a stationary, proportional, long-run equilibrium relationship. Both, the Johansen and Engle-Granger procedures are implemented. Estimation of Vector Error Correction (VEC) models allows for the derivation of the cointegrating vector and relationship, and results seem to justify the argument of money neutrality with regards to food prices. VEC estimation makes feasible also, the calculation of the adjustment speed to the long-run equilibrium between the two variables considered.

Suggested Citation

  • Nikolaos Ziotis & Christos T. Papadas, 2009. "Supply of Money and Food Prices: A Time Series Analysis," Working Papers 2009-06, Agricultural University of Athens, Department Of Agricultural Economics.
  • Handle: RePEc:aua:wpaper:2009-06

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    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation


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