The Quantity Theory of Money, Quantitative Easing and the Missing Inflation Phenomenon

Imad A. Moosa (), Khalid Al-Saad () and Ibrahim N. Khatatbeh ()
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Imad A. Moosa: Department of Economics, Kuwait University, Kuwait City, Kuwait
Khalid Al-Saad: Department of Economics, Kuwait University, Kuwait City, Kuwait
Ibrahim N. Khatatbeh: Business School, Hashemite University, Zarqa, Jordan

Journal of Central Banking Theory and Practice, 2024, vol. 13, issue 2, 71-88

Abstract: Several explanations have been put forward for the observation that massive inflation has not appeared as a result of the explosive monetary growth generated by quantitative easing that was in 2008. Several plausible explanations have been put forward for this observation, but none of them can explain the huge gap between monetary inflation and price inflation. The alternative explanation presented in this paper is that monetary inflation is more reflected in stock prices than the CPI. It is demonstrated that by adjusting the CPI to reflect changes in stock prices, the gap between the trends of the money supply the CPI can be almost eliminated.

Keywords: Quantitative Easing; Monetary Inflation; Price Inflation; Quantity Theory of Money. (search for similar items in EconPapers)
JEL-codes: E31 E58 (search for similar items in EconPapers)
Date: 2024
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