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Money Growth (money + growth)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting100%

Terms modified by Money Growth

  • money growth rate
    		•

    Selected Abstracts

    Excess Money Growth and Inflation Dynamics,

    INTERNATIONAL FINANCE, Issue 3 2007
    Barbara Roffia
    This paper analyses the short-run impact of periods of strong monetary growth on inflation dynamics for 15 industrialized economies. We find that when robust money growth is accompanied by large increases in stock and house prices and loose credit conditions, the probability of recording an inflationary outburst over a three-year horizon is significantly increased. In contrast, significant money stock expansions that are not associated with sustained credit increases and strong dynamics in other asset prices seem to be less likely to have inflationary consequences and are thus less worrying from a policy perspective. [source]

    Trend Breaks in Money Growth and the Money-output Relation in the U.S.

    OXFORD BULLETIN OF ECONOMICS & STATISTICS, Issue 1 2000
    Jon Vilasuso
    First page of article [source]

    Targeting Inflation with a Role for Money

    ECONOMICA, Issue 288 2005
    Ulf Söderström
    This paper demonstrates how a target for money growth can be beneficial for an inflation-targeting central bank acting under discretion. Because the growth rate of money is closely related to the change in the interest rate and the growth of real output, delegating a money growth target to the central bank makes discretionary policy more inertial, leading to better social outcomes. This delegation scheme is also compared with other schemes suggested in the literature. The results indicate that stabilizing money growth around a target can be a sensible strategy for monetary policy, although other delegation schemes are often more efficient. [source]

    Is Reserve-ratio Arithmetic More Pleasant?

    ECONOMICA, Issue 279 2003
    Joydeep Bhattacharya
    Does it matter in a revenue-neutral setting if the government changes the inflation tax base or the inflation tax rate? We answer this question within the context of an overlapping-generations model in which government bonds, capital and cash reserves coexist. We consider experiments that parallel those studied in Sargent and Wallace's ,unpleasant monetarist arithmetic'; the government uses seigniorage to service its debt, choosing between changing either the money growth rate (the inflation tax rate) or the reserve-requirement ratio (the inflation tax base). In the former case we obtain standard unpleasant arithmetic; in the long run a permanent open market sale results in higher money growth, and higher long-run inflation. Somewhat surprisingly, it turns out that, for a given money growth rate, lower reserve requirements fund the government's interest expense. Associated with the lower reserve requirements is lower long-run inflation and higher welfare, compared with the money-growth case. The broad message is that reserve-ratio arithmetic can be pleasant even when money-growth arithmetic is not. [source]

    MARKET POWER, PRICE ADJUSTMENT, AND INFLATION,

    INTERNATIONAL ECONOMIC REVIEW, Issue 1 2010
    Allen Head
    We study a monetary search economy in which endogenous fluctuations in market power driven by changes in consumers' search intensity determine the extent of price adjustment to movements in productivity and the money growth rate. A calibrated version of the economy exhibits countercyclical fluctuations in markups and is consistent with the observed incomplete response of nominal prices to cost movements associated with productivity fluctuations and to changes in the money growth rate. Furthermore, a higher average rate of inflation results in a lower average markup and increases the sensitivity of prices to fluctuations in either productivity or money growth. [source]

    Excess Money Growth and Inflation Dynamics,

    INTERNATIONAL FINANCE, Issue 3 2007
    Barbara Roffia
    This paper analyses the short-run impact of periods of strong monetary growth on inflation dynamics for 15 industrialized economies. We find that when robust money growth is accompanied by large increases in stock and house prices and loose credit conditions, the probability of recording an inflationary outburst over a three-year horizon is significantly increased. In contrast, significant money stock expansions that are not associated with sustained credit increases and strong dynamics in other asset prices seem to be less likely to have inflationary consequences and are thus less worrying from a policy perspective. [source]

    The Lag from Monetary Policy Actions to Inflation: Friedman Revisited

    INTERNATIONAL FINANCE, Issue 3 2001
    Nicoletta Batini
    This paper updates and extends Friedman's (1972) evidence on the lag between monetary policy actions and the response of inflation. Our evidence is based on UK and US data for the period 1953,2001 on money growth rates, inflation and interest rates, as well as annual data on money growth and inflation. We reaffirm Friedman's result that it takes over a year before monetary policy actions have their peak effect on inflation. This result has persisted despite numerous changes in monetary policy arrangements in both countries. Similarly, advances in information processing and in financial market sophistication do not appear to have substantially shortened the lag. The empirical evaluation of dynamic general equilibrium models needs to be extended to include an assessment of these models' ability to account for the monetary transmission lags found in the data. [source]

    Exchange rates, prices and money: A long-run perspective

    INTERNATIONAL JOURNAL OF FINANCE & ECONOMICS, Issue 4 2001
    Paul De Grauwe
    Abstract In this paper we analyse the long-run proportionality and neutrality propositions between inflation and money growth and between exchange rate changes and money growth. Using a sample of 100 countries over a thirty-year period we find that the evidence in favour of these propositions is weak for the low inflation countries and very strong for the high inflation countries. We propose an explanation based on productivity shocks and transaction costs. Copyright © 2001 John Wiley & Sons, Ltd. [source]

    ORDINARY LEAST SQUARES LEARNING AND NONLINEARITIES IN MACROECONOMICS

    JOURNAL OF ECONOMIC SURVEYS, Issue 1 2010
    Orlando Gomes
    Abstract The paper reviews the literature on adaptive learning in macroeconomic settings where the formation of expectations is particularly relevant. Special attention will be given to simple two-period overlapping generations models with a unique fixed point perfect foresight equilibrium; in this kind of scenario, eventual long-term periodic and a-periodic cycles are exclusively the result of the process of learning. The outcome that high rates of money growth have a potentially destabilizing effect generating periodic fluctuations and chaos is emphasized. The persistence of systematic forecast errors in a scenario where agents are supposed to act rationally is relevant in this context and it will be thoroughly discussed resorting to the notions of self-fulfilling mistakes, consistent expectations equilibria and beliefs equilibria. [source]

    Monetary Policy and the Stock Market: Theory and Empirical Evidence

    JOURNAL OF ECONOMIC SURVEYS, Issue 4 2001
    Peter Sellin
    This paper gives a comprehensive review of the literature on the interaction between real stock returns, inflation, and money growth, with a special emphasis on the role of monetary policy. This is an area of research that has interested monetary and financial economists for a long time. Monetary economists have been interested in the question whether money has any effect on real stock prices, while financial economists have investigated whether equity is a good hedge against inflation. Empirical studies show that money can be helpful in predicting future stock returns. Empirical evidence also suggest that equity is not a good hedge against inflation in the short run but may be so in the long run. The short-run negative relation between stock returns and inflation can easily be explained by theoretical models. If the central bank conducts a countercyclical monetary policy this will result in a negative relation between inflation and stock returns, while if it conducts a procyclical policy we could observe a positive relation. According to both theoretical and empirical studies investors receive an inflation risk premium for holding equity. [source]

    A monetary real-time conditional forecast of euro area inflation,

    JOURNAL OF FORECASTING, Issue 4 2010
    Sylvia Kaufmann
    Abstract Based on a vector error correction model we produce conditional euro area inflation forecasts. We use real-time data on M3 and HICP, and include real GPD, the 3-month EURIBOR and the 10-year government bond yield as control variables. Real money growth and the term spread enter the system as stationary linear combinations. Missing and outlying values are substituted by model-based estimates using all available data information. In general, the conditional inflation forecasts are consistent with the European Central Bank's assessment of liquidity conditions for future inflation prospects. The evaluation of inflation forecasts under different monetary scenarios reveals the importance of keeping track of money growth rate in particular at the end of 2005. Copyright © 2009 John Wiley & Sons, Ltd. [source]

    How Important Is Money in the Conduct of Monetary Policy?

    JOURNAL OF MONEY, CREDIT AND BANKING, Issue 8 2008
    MICHAEL WOODFORD
    monetarism; two-pillar strategy; cashless economy I consider some of the leading arguments for assigning an important role to tracking the growth of monetary aggregates when making decisions about monetary policy. First, I consider whether ignoring money means returning to the conceptual framework that allowed the high inflation of the 1970s. Second, I consider whether models of inflation determination with no role for money are incomplete, or inconsistent with elementary economic principles. Third, I consider the implications for monetary policy strategy of the empirical evidence for a long-run relationship between money growth and inflation. And fourth, I consider reasons why a monetary policy strategy based solely on short-run inflation forecasts derived from a Phillips curve may not be a reliable way of controlling inflation. I argue that none of these considerations provides a compelling reason to assign a prominent role to monetary aggregates in the conduct of monetary policy. [source]

    Monitoring and Forecasting Currency Crises

    JOURNAL OF MONEY, CREDIT AND BANKING, Issue 2-3 2008
    ATSUSHI INOUE
    currency crises; forecasting; leading indicators; Diffusion Index; exchange rates Can we improve forecasts of currency crises by using a large number of predictors? Which predictors should we use? This paper evaluates the performance of traditional leading indicators and a new Diffusion Index (DI) method as Early Warning Systems to monitor the risk and forecast the likelihood of the recent currency crises in East Asia. We find that the DI performs quite well in real time. For most countries, the forecasted probabilities of a crisis increase substantially around the actual time of the crisis. The economic variables that help in forecasting future crises are output growth, interest rates and money growth. [source]

    THE EVOLUTION OF INFLATION AND UNEMPLOYMENT: EXPLAINING THE ROARING NINETIES

    AUSTRALIAN ECONOMIC PAPERS, Issue 4 2008
    MARIKA KARANASSOU
    This paper analyses the relation between US inflation and unemployment from the perspective of ,frictional growth,' a phenomenon arising from the interplay between growth and frictions. In particular, we focus on the interaction between money growth and nominal frictions. In this context we show that monetary policy has not only persistent, but permanent real effects, giving rise to a long-run inflation-unemployment tradeoff. We evaluate this tradeoff empirically and assess the impact of productivity, money growth, budget deficit, and trade deficit on the US unemployment and inflation trajectories during the nineties. [source]