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| Author: | Milas, C. |
| Title: | Does high M4 money growth trigger large increases in UK inflation? Evidence from a regime-switching model |
| Journal: | Oxford Economic Papers
2009 : JAN, VOL. 61:1, p. 168-182 |
| Index terms: | economic theory inflation models United Kingdom |
| Language: | eng |
| Abstract: | Using U.K. data since the introduction of inflation targeting in Oct. 1992, this study shows that: (i) the relationship btw. inflation and M4 (amount of money) growth is not stable over time, and (ii) the tendency of M4 to exert inflationary pressures is conditional on annual M4 growth exceeding 9.8 percent. Above this threshold, the money effect on inflation is very small. The implication is that the Monetary Policy Committee should not be especially worried for not paying close attention to M4 money movements when setting interest rates. |
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