Is Inflation Always and Everywhere a Monetary Phenomenon?*

Grauwe, Paul De; Polan, Magdalena

doi:10.1111/j.1467-9442.2005.00406.x

Cited by 170 publications

(44 citation statements)

References 13 publications

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“…This result has corroborated the findings of Jalil, Tariq, and Bibi (2014) for Pakistani economy which discovered that debts financing in Pakistan had been passing through to increase in price level, which affirmed the plausibility of fiscal theory of price level in Pakistan. Also, the study confirmed the assertion of Grauwe and Polan (2005) that money does not matter in an economy which does not experience hyperinflation. Again, the result tilted towards the findings of Omanukwue (2010) on Nigerian economy which tested the plausibility of quantity theory of money and found that the relationship between money and inflation was weak.…”

Section: Cointegrationsupporting

confidence: 81%

Relative Importance of Public Debts and Money Growth on Inflation in Nigeria

Oyeleke¹,

Orisadare²

2018

IJEF

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This paper investigates the relative importance of public debts and money growth on inflation in Nigeria from 1980 to 2015. Annual secondary data collected from World Development Indicators were used for the analysis. After examining the behaviour of the time series, Unrestricted Vector Autoregressive (VAR) technique of estimation is employed with a view to determining whether inflation is a monetary or fiscal phenomenon in Nigeria. The results show that, both in the short and long run, public debts accounts for a sizeable percentage in the variation of inflation rather than growth in monetary supply, making inflation a fiscal phenomenon in Nigeria. We therefore recommend that the attainment of fiscal solvency would be more effective in achieving price stability in Nigeria.

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Section: Cointegrationsupporting

confidence: 81%

Relative Importance of Public Debts and Money Growth on Inflation in Nigeria

Oyeleke¹,

Orisadare²

2018

IJEF

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“…D'Agostino and others (2006) make the point that the predictability of macroeconomic variables in general may have been lowered as macroeconomic volatility declined during the great moderation. 42 In a related result, de Grauwe and Polan (2005) report that the relationship between money and longer-run inflation is the strongest in high-inflation countries. This suggests focusing any comparative analysis of competing models of inflation on a unified sample period, preferably a recent one to maximize the relevance of results for policy makers.…”

Section: B a Systematic Analysis Of The Information Content Of Moneymentioning

confidence: 90%

“…For example, Roffia and Zaghini (2007) show that, over a three-year horizon, in a panel of 15 industrialized countries starting in early 1970s, episodes of strong money growth are related to higher inflation only in about half of the 71 cases. De Grauwe and Polan (2005), looking at a large panel of about 160 countries since the 1970s find that the relationship between money and longer-run inflation is weak at best for low-inflation regions comparable to today's euro area. Gerlach andSvensson (2003, p.1669) find that the growth rate of nominal M3 adds little to the forecasting accuracy of an output-gap based model of euro-area inflation, which to them suggests "considerable doubt on its usefulness for policy purposes."…”

Section: A a Brief Survey Of The Empirical Literaturementioning

confidence: 99%

The ECB’s Monetary Analysis Revisited

Berger

Harjes

Stavrev

2010

The European Central Bank at Ten

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This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.Monetary aggregates continue to play an important role in the ECB's policy strategy. This paper revisits the case for money, surveying the ongoing theoretical and empirical debate. The key conclusion is that an exclusive focus on non-monetary factors alone may leave the ECB with an incomplete picture of the economy. However, treating monetary factors as a separate matter is a second-best solution. Instead, a general-equilibrium inspired analytical framework that merges the economic and monetary "pillars" of the ECB's policy strategy appears the most promising way forward. The role played by monetary aggregates in such unified framework may be rather limited. However, an integrated framework would facilitate the presentation of policy decisions by providing a clearer narrative of the relative role of money in the interaction with other economic and financial sector variables, including asset prices, and their impact on consumer prices. JEL Classification Numbers: C11, C30, E31, E40

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“…For example, Roffia and Zaghini (2007) and De Grauwe and Polan (2005) argue that the relationship between money and inflation across industrialized countries and time my be weaker than what is commonly thought. For the euro area, Gerlach and Svensson (2003) find that the growth rate of nominal M3 adds little to the forecasting accuracy of an output-gap based model of euro area inflation.…”

Section: Related Literaturementioning

confidence: 92%

The Information Content of Money in Forecasting Euro Area Inflation

Stavrev

Berger²

2008

IMF Working Papers

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This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. This paper contributes to the debate on the role of money in monetary policy by analyzing the information content of money in forecasting euro-area inflation. We compare the predictive performance within and among various classes of structural and empirical models in a consistent framework using Bayesian and other estimation techniques. We find that money contains relevant information for inflation in some model classes. Money-based New Keynesian DSGE models and VARs incorporating money perform better than their cashless counterparts. But there are also indications that the contribution of money has its limits. The marginal contribution of money to forecasting accuracy is often small, money adds little to dynamic factor models, and it worsens forecasting accuracy of partial equilibrium models. Finally, non-monetary models dominate monetary models in an all-out horserace. JEL Classification Numbers:C11, C30, E31, E40

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Is Inflation Always and Everywhere a Monetary Phenomenon?*

Cited by 170 publications

References 13 publications

Relative Importance of Public Debts and Money Growth on Inflation in Nigeria

Relative Importance of Public Debts and Money Growth on Inflation in Nigeria

The ECB’s Monetary Analysis Revisited

The Information Content of Money in Forecasting Euro Area Inflation

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