NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Is Quantity Theory Still Alive?

Pedro Teles, Harald Uhlig

NBER Working Paper No. 16393
Issued in September 2010
NBER Program(s):   EFG   IFM   ME

This paper investigates whether the quantity theory of money is still alive. We demonstrate three insights. First, for countries with low inflation, the raw relationship between average inflation and the growth rate of money is tenuous at best. Second, the fit markedly improves, when correcting for variation in output growth and the opportunity cost of money, using elasticities implied by theories of Baumol-Tobin and Miller-Orr. Finally, the sample after 1990 shows considerably less inflation variability, worsening the fit of a one-for-one relationship between money growth and inflation, and generates a fairly low elasticity of money demand.

download in pdf format
   (171 K)

email paper

This paper is available as PDF (171 K) or via email.

This paper was revised on August 19, 2013

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w16393

Users who downloaded this paper also downloaded these:
Adrian, Colla, and Shin Which Financial Frictions? Parsing the Evidence from the Financial Crisis of 2007 to 2009
Davis, Haltiwanger, Jarmin, Lerner, and Miranda w17399 Private Equity and Employment
Monacelli, Quadrini, and Trigari w17389 Financial Markets and Unemployment
Philippon and Midrigan w16965 Household Leverage and the Recession
Auerbach and Gorodnichenko w17447 Fiscal Multipliers in Recession and Expansion
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us