Is Inflation Always and Everywhere a Monetary Phenomenon?
Centre for Economic Policy Research, 2001 - Inflación (Finanzas) - Modelos econométricos - 38 pages
Using a sample of about 160 countries over the last thirty years we test for the quantity theory relationship between money and inflation. When analysing the full sample of countries we find a strong positive relation between the long-run inflation and money growth rate. The relation is not, however, proportional. The strong link between inflation and money growth is almost wholly due to the presence of high (or hyper-) inflation countries in the sample. The relationship between inflation and money growth for low inflation countries (on average less than 10% per annum over the last 30 years) is weak. We find that the long-run average inflation and country-specific factors have a significant influence on the strength of the relationship. We also confirm that money growth and output growth are orthogonal in the long-run; i.e. higher growth rates of money do not lead to higher growth rates of output.
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0.0000 Adjusted R-squared Adjusted R-squared Durbin-Watson Adjusted R-squared Prob(F-statistic Akaike info criterion analysing ANTIGUA AND BARBUDA average inflation rate average money growth averages Variable Coefficient BELARUS BOTSWANA BURKINA FASO CEPR class of low coefficient of money cross-section Discussion Paper effect on inflation Error t-Statistic Prob estimated European Central Bank everywhere a monetary fixed effects model full sample GAMBIA growth and inflation growth and output growth and velocity GUINEA-BISSAU high inflation countries higher growth rates hyperinflation inflation and money Katholieke Universiteit Leuven level of inflation long run low inflation countries M1 and M2 M2 growth MOLDOVA monetary phenomenon money growth money supply MYANMAR orthogonality assumption panel data panel data model PAPUA NEW GUINEA period averages Variable proportionality prediction R-squared Durbin-Watson stat rate of inflation rate of money regression relation between inflation relation between money relationship between money sample of countries subsamples theory of money VANUATU Variable Coefficient Std velocity changes