Effects on Inflation of Loanable Funds and M1

John Heim

Chapter Chapter 23 in Why Fiscal Stimulus Programs Fail, Volume 1, 2021, pp 491-506 from Springer

Abstract: Abstract This chapter tests the relationship of inflation to changes in M1 and loanable funds in Phillips curve inflation models. M1 was found significantly related to inflation, but not loanable funds or either of its two components, even though we show changes in LF are positively and significantly related to changes in M1. The lack of relationship appears to be an econometric problem related to adding variances, not a substantive finding. Evidence indicated M1 growth was most consistently driven by changes in the exogenous part (FR purchases) of LF, but less systematically to growth in the endogenous part.

Keywords: M1; Money supply; Inflation; Loanable funds; Federal reserve; Securities purchases (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-65675-1_23

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DOI: 10.1007/978-3-030-65675-1_23

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