The quantity theory of money revisited

Graff, Michael (2008). The quantity theory of money revisited. In: Canadian Economics Association 42nd Annual Meeting, Vancouver, Canada, (). 6 - 8 June, 2008.


Author Graff, Michael
Title of paper The quantity theory of money revisited
Conference name Canadian Economics Association 42nd Annual Meeting
Conference location Vancouver, Canada
Conference dates 6 - 8 June, 2008
Publication Year 2008
Sub-type Fully published paper
Total pages 32
Language eng
Abstract/Summary The paper reconstructs the origins of the quantity theory of money and its applications. Against the background of the history of money, it is shown that the theory was flexible enough to adapt to institutional change and thus succeeded in maintaining its relevance. To this day, it is useful as an analytical framework. Although, due to Goodhart's Law, it now has only limited potential to guide monetary policy and was consequently abandoned by most central banks, an empirical analysis drawing on a panel data set covering more than hundred countries from 1991 to the present confirms that the theory still holds: a positive correlation between the excess growth rate of the stock of money and the rate of inflation cannot be rejected. Yet, while the correlation holds for the whole sample, proportionality is driven by a small number of influential observations with very high inflation.
Subjects 1401 Economic Theory
140101 History of Economic Thought
Keyword Quantity theory of money
Monetary targeting
Demand for money
Q-Index Code EX
Q-Index Status Provisional Code

 
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Created: Wed, 24 Feb 2010, 11:24:02 EST by Elissa Saffery on behalf of Faculty Of Health Sciences