Money Growth, Output Growth, and Inflation: Estimation of a Modern Quantity Theory

2002 ◽  
Vol 69 (2) ◽  
pp. 398-413
Author(s):  
John R. Moroney
Author(s):  
Harold L. Cole

This chapter discusses the results of historical studies of the empirical relationship between output growth, inflation and money growth. It seeks to relate these results to the quantitative implications of our model.


2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Michele Fratianni ◽  
Marco Gallegati ◽  
Federico Giri

Abstract How long is the long run in the relationship between money growth and inflation? How important are high inflation episodes for the unit slope finding in the quantity theory of money? To answer these questions, we study the relationship between excess money growth and inflation over time and across frequencies using annual data from 1870 to 2013 for 16 developed countries. Wavelet-based exploratory analysis shows the existence of a close stable relationship between excess money growth and inflation only over long time horizons, i.e. periods greater than 16–24 years, with money growth mostly leading. When we investigate the sensitivity of the unit slope finding to inflation episodes using a “time-frequency-based” panel data approach, we find that low-frequency regression coefficients estimated over variable-length subsamples are largely affected by high inflation episodes occurring in the 1910s, the 1940s, and the 1970s. Taken together, our results suggest that inflationary upsurges affect regression coefficients, but not the closeness of the long-run relationship. This reconciles the validity of the quantity theory of money with the current disinterest of monetary policymaking in money growth.


1983 ◽  
Vol 62 (10) ◽  
pp. 5
Author(s):  
John L. Burbidge
Keyword(s):  

1984 ◽  
Vol 63 (9) ◽  
pp. 7
Author(s):  
Tom Medlrum
Keyword(s):  

2008 ◽  
pp. 31-45 ◽  
Author(s):  
S. Glazyev

The article critically considers basic postulates of quantity theory of money. It shows that they reflect the static state of the economy in abstract models of market equilibrium but do not prove true in actual economic processes. In contrast to monetarists’ view, prices can rise as well as fall even if other variables of the monetarist equation are stable. Thus it cannot be used for grounding monetary policy. The author comes to the conclusion on the dogmatism of Russian monetary authorities that seriously hinders the country’s economic development. He proposes to switch to market organization of money supply basing on regulation of the refinancing rate.


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