Money Growth, Output Growth, and Inflation: Estimation of a Modern Quantity Theory
This paper develops a long-run version of the quantity theory of money growth, real GDP growth, and inflation. Inflation rates, averaged for the years 1980-1993, are computed for 81 countries. These cross-section inflation rates are explained almost entirely by average M2 growth rates. In countries...
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| Veröffentlicht in: | Southern economic journal 2002-10, Vol.69 (2), p.398-413 |
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| creator | Moroney, John R. |
| description | This paper develops a long-run version of the quantity theory of money growth, real GDP growth, and inflation. Inflation rates, averaged for the years 1980-1993, are computed for 81 countries. These cross-section inflation rates are explained almost entirely by average M2 growth rates. In countries marked by high money growth and inflation, the estimated coefficients of M2 growth are strikingly close to one, strongly confirming the quantity theory. By contrast, in countries with relatively low money growth and inflation, the estimated money growth coefficient is only 0.69; the quantity theory offers a less complete explanation of inflation. Money growth and GDP growth are nearly orthogonal, consistent with long-run monetary superneutrality. The quantity theory is a reliable model of inflation for most countries, but not for those experiencing slow long-run money growth. |
| doi_str_mv | 10.1002/j.2325-8012.2002.tb00499.x |
| format | Article |
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| source | Wiley Online Library Journals Frontfile Complete; Business Source Complete; Jstor Complete Legacy |
| subjects | Coefficients Economic growth Economic growth rate Economic growth theories Economic theory Economics Equilibrium Estimation Estimation theory GDP Gross Domestic Product Household utilities Inflation Inflation rates Monetary theory Money Price levels Quantity theory of money Real gross domestic product Regression analysis Standard error Statistical variance Studies |
| title | Money Growth, Output Growth, and Inflation: Estimation of a Modern Quantity Theory |
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