THE LONG-RUN LINK BETWEEN MONEY GROWTH AND INFLATION

Is inflation always a monetary phenomenon? Many economists believe that the link between money growth and inflation in the U.S. has weakened over the last two decades due in part to the Federal Reserve's policy experiment in 1979–1982 and innovations in the financial sector of the economy. I fi...

Full description

Saved in:
Bibliographic Details
Published in:Economic inquiry 1998-04, Vol.36 (2), p.229-243
Main Author: CROWDER, WILLIAM J.
Format: Article
Language:English
Subjects:
Alliances
Causality
Consumer Price Index
Costs
Dollar (United States)
Econometrics
Economic aspects
Economic growth
Economic models
Economic policy
Equilibrium
GDP
Gross Domestic Product
Growth rate
Hypotheses
Inflation
Inflation (Finance)
Inflation rates
Monetary policy
Money supply
Price levels
Statistical analysis
Studies
Time series
United States economic conditions
Velocity
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Is inflation always a monetary phenomenon? Many economists believe that the link between money growth and inflation in the U.S. has weakened over the last two decades due in part to the Federal Reserve's policy experiment in 1979–1982 and innovations in the financial sector of the economy. I find that the long‐run relationship between money growth and inflation is strong in a statistical sense and important economically. The key result is that the trend or growth component in CPI inflation is entirely due to the trend component of monetary base growth. (JEL C32, E31, E51)
ISSN:0095-2583
1465-7295
DOI:10.1111/j.1465-7295.1998.tb01709.x