Global liquidity, money growth and UK inflation

Michael Ellington and Costas Milas

Journal of Financial Stability, 2019, vol. 42, issue C, 67-74

Abstract: This paper uses tools from the classical theory of inflation for UK Consumer Price Inflation from 1970Q1 to 2017Q4. In particular, we adopt augmented Phillips curve type equations within a linear and regime-switching framework where regimes are governed by previous inflation rates. Our non-linear models show that a monetary explanation of inflation is prominent during periods of high inflation. However our models imply that during periods of high inflation, The Bank of England should monitor monetary conditions in conjunction with monetary policy stance; as these can help dampen inflation persistence.

Keywords: Global liquidity; Inflation; Divisia money; Non-linear model (search for similar items in EconPapers)
JEL-codes: C5 E5 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (5)

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Working Paper: Global liquidity, money growth and UK inflation (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:42:y:2019:i:c:p:67-74

DOI: 10.1016/j.jfs.2019.05.012

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