Inflation and Monetary Regimes
Gerald P. Dwyer
Clemson University; Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA)
Federal Reserve Banks - Federal Reserve Bank of Atlanta
September 1, 2009
Federal Reserve Bank of Atlanta Working Paper Series No. 2009-26
Correlations of inflation with the growth rate of money increase when data are averaged over longer time periods. Correlations of inflation with the growth of money also are higher when high-inflation as well as low-inflation countries are included in the analysis. We show that serial correlation in the underlying inflation rate ties these two observations together and explains them. We present evidence that averaging increases the correlation of inflation and money growth more when the underlying inflation rate has higher serial correlation.
Number of Pages in PDF File: 43
Keywords: money and inflation, inflation, quantity theory
JEL Classification: E31, E5
Date posted: October 1, 2009
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