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Money, Output and Inflation in the Longer Term: Major Industrial Countries, 1880-2001

  • Alfred A. Haug

    ()

    (Department of Economics, University of Otago)

  • William G. Dewald

    ()

    (Department of Economics, Ohio State University)

We study how fluctuations in money growth correlate with fluctuations in real output growth and inflation. Using band-pass filters, we extract cycles from each time series that last 2 to 8 (business cycles) and 8 to 40 (longer-term cycles) years. We employ annual data, 1880-2001 without gaps, for eleven industrial countries. Fluctuations in money growth do not play a systematic role at business cycle frequencies. However, money growth leads or affects contemporaneously inflation, but not real output growth, in the longer run. Also, formal break tests indicate no structural changes for the longer-term money growth and inflation relationship, despite changes in policy regimes.

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File URL: http://www.business.otago.ac.nz/econ/research/discussionpapers/DP_1013.pdf
File Function: First version, 2010
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Paper provided by University of Otago, Department of Economics in its series Working Papers with number 1013.

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Length: 25 pages
Date of creation: Sep 2010
Date of revision: Sep 2010
Handle: RePEc:otg:wpaper:1013
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