Frain, John C. 'Inflation and money growth: evidence from a multi-country data-set'. - Economic & Social Review, Vol. 35, No. 3, Winter, 2004, pp. 251-266, Dublin: Economic & Social Research Institute
Using a multi-country data set strong correlation are found between average growth
rates of monetary aggregates and average inflation. The correlation remains strong when countries with higher average inflation rates are removed from the sample. These results confirm the strong correlation found in the traditional literature but contradict those in De Grauwe and Polan (2001) who, in a recent analysis, find that the strong link vanishes when higher inflation countries are excluded. Further analysis confirms the unit response and bears out the value of monetary aggregates as an input to the making of monetary policy.
Paper read at The Eighteenth Annual Conference of the Irish Economic Association, Belfast 2004.
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