A Monetarist Money Demand Function
5 Pages Posted: 24 Aug 2012
Date Written: 1984
In the first part of this article, inflation as a monetary phenomenon is discussed. The discussion is from the perspective of the modern formulation of the quantity theory. (See, in particular, Chapter 2 in Friedman and Schwartz, Monetary Trends in the United States and the United Kingdom). In the second part of the article, empirical estimation of the relationship between money growth and inflation is discussed. The article that accompanies this one; “The Behavior of the M1 Demand Function in the Early 1980s” contains the results of estimating this relationship for the post-Korean War period in the United States.
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