Money, income, and prices: the velocity of money in nine major O.E.C.D. economies
Rule, William Thomas
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The widespread growth of nominal income and the price level in many countries in the late 1960's and early 1970 1 s added to interest in the quantity theory of money. Most earlier work centered on the United States. This study investigates the applicability of some simple quantity theory hypotheses to a group of nine major non-U.S. O.E.C.D. economies. After a brief discussion of the quantity theory with attention to its applicability under regimes of fixed and floating exchange rates, there is a discussion of the estimation of quarterly GNP for countries not reporting full series, using related quarterly and annual data by generalized least squares methods. Analysis of the relationship between money and income is conducted using annual and quarterly data. Regressions of two measures of the money stock on nominal income, and of money per unit of output on the price level are estimated for annual data. Using quarterly data, distributed lags of money on nominal income are estimated. While there was found to be considerable variation in the closeness of the money-income relationship, the evidence suggests the broad applicability of the quantity theory within a wide range of monetary arrangements and exchange rate regimes.
- Doctoral Dissertations