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Monetary Growth (monetary + growth)

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

Selected Abstracts

The two pillars of the European Central Bank

ECONOMIC POLICY, Issue 40 2004
Stefan Gerlach
SUMMARY The Pillars of The ECB I interpret the European Central Bank's two-pillar strategy by proposing an empirical model for inflation that distinguishes between the short- and long-run components of inflation. The latter component depends on an exponentially weighted moving average of past monetary growth and the former on the output gap. Estimates for the 1971,2003 period suggest that money can be combined with other indicators to form the ,broadly based assessment of the outlook for future price developments' that constitutes the ECB's second pillar. However, the analysis does not suggest that money should be treated differently from other indicators. While money is a useful policy indicator, all relevant indicators should be assessed in an integrated manner, and a separate pillar focused on monetary aggregates does not appear necessary. ,Stefan Gerlach [source]

Long-Run Links among Money, Prices and Output: Worldwide Evidence

GERMAN ECONOMIC REVIEW, Issue 1 2006
Helmut Herwartz
Quantity theory of money; P-star; panel cointegration analysis. Abstract. Starting from the quantity theory of money we analyse the dynamic relationships between money, real output and prices for an unbalanced panel of 110 economies. Complementary to trivariate analyses we also adopt a P-star model explaining inflation via an equilibrium price level (P-star), which in turn depends on potential output and money. A key issue of the paper is the cross-sectional stability of estimation and inference results. We find cointegration among the considered variables. Particularly for high inflation countries homogeneity between prices and money cannot be rejected. Given homogeneity we find evidence for an error-correction mechanism linking current price changes and the lagged price gap. Parameter estimates indicating the adjustment towards the price equilibrium are larger in absolute value for high inflation countries. The latter results indicate that central banks, even in high inflation countries, can improve price stability by controlling monetary 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]

Effect of Money Supply on Real Output and Price in China

CHINA AND WORLD ECONOMY, Issue 2 2009
Chih-Hsiang Chang
F01; Q13; Q41 Abstract Over the past 30 years, China has achieved remarkable long-term economic growth. Using quarterly data, we study the effects of money supply on real output and inflation in China between 1993 and 2008. To this end, we use money supply shocks after filtering out the expected component of the money supply. Our findings provide evidence supporting the asymmetric effect of positive and negative money supply shocks on real output and inflation in China. That is, real GDP growth in China responds to negative money supply shocks but not positive money supply shocks. In addition, inflation responds to positive money supply shocks but not negative money supply shocks. We conclude that the People's Bank of China's policy of steady monetary growth appears to be appropriate. Our study offers important policy implications for China. [source]