REEXAMINING THE QUANTITY THEORY OF MONEY: AN EMPIRICAL ANALYSIS FROM THE JOINT HYPOTHESIS
The joint hypothesis test is a replicable interpretation of the quantity theory of money (QTM) when used as an inflation theory. This study examined the effect of money supply and gross domestic product (GDP) growth on inflation volatility. We used the cross-country data of 40 countries, both in 20...
Saved in:
| Main Authors: | , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Faculty of Economics, University of Tuzla
2021-05-01
|
| Series: | Economic Review |
| Subjects: | |
| Online Access: | http://er.ef.untz.ba/index.php/er/article/view/44 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1823861262199554048 |
|---|---|
| author | Cheng-Wen Lee Andrian Dolfriandra Huruta |
| author_facet | Cheng-Wen Lee Andrian Dolfriandra Huruta |
| author_sort | Cheng-Wen Lee |
| collection | DOAJ |
| description |
The joint hypothesis test is a replicable interpretation of the quantity theory of money (QTM) when used as an inflation theory. This study examined the effect of money supply and gross domestic product (GDP) growth on inflation volatility. We used the cross-country data of 40 countries, both in 2002 and 2014, from the World Bank publications. We analyzed the data using both the unrestricted regression model and joint hypothesis testing (the Wald test). The unrestricted regression results pointed inflation volatility in 40 countries was mostly driven by the monetary side, not by the real sector. Meanwhile, the joint hypothesis test demonstrated Strong Wald and Weak Wald test for the QTM prediction were rejected. These findings implied undesirable results from a monetarist perspective. We proposed an alternative method to confirm the joint hypothesis test from the QTM. It would be interesting to see whether our findings hold in other countries.
|
| format | Article |
| id | doaj-art-7303c5d77ce444e18953d0cbd89cef35 |
| institution | Kabale University |
| issn | 1512-8962 2303-680X |
| language | English |
| publishDate | 2021-05-01 |
| publisher | Faculty of Economics, University of Tuzla |
| record_format | Article |
| series | Economic Review |
| spelling | doaj-art-7303c5d77ce444e18953d0cbd89cef352025-02-10T00:30:53ZengFaculty of Economics, University of TuzlaEconomic Review1512-89622303-680X2021-05-01191 REEXAMINING THE QUANTITY THEORY OF MONEY: AN EMPIRICAL ANALYSIS FROM THE JOINT HYPOTHESISCheng-Wen Lee0Andrian Dolfriandra HurutaDepartment of International Business, Chung Yuan Christian University, Taiwan The joint hypothesis test is a replicable interpretation of the quantity theory of money (QTM) when used as an inflation theory. This study examined the effect of money supply and gross domestic product (GDP) growth on inflation volatility. We used the cross-country data of 40 countries, both in 2002 and 2014, from the World Bank publications. We analyzed the data using both the unrestricted regression model and joint hypothesis testing (the Wald test). The unrestricted regression results pointed inflation volatility in 40 countries was mostly driven by the monetary side, not by the real sector. Meanwhile, the joint hypothesis test demonstrated Strong Wald and Weak Wald test for the QTM prediction were rejected. These findings implied undesirable results from a monetarist perspective. We proposed an alternative method to confirm the joint hypothesis test from the QTM. It would be interesting to see whether our findings hold in other countries. http://er.ef.untz.ba/index.php/er/article/view/44quantity theory of moneyjoint hypothesisinflationmoney supplyGDP growth |
| spellingShingle | Cheng-Wen Lee Andrian Dolfriandra Huruta REEXAMINING THE QUANTITY THEORY OF MONEY: AN EMPIRICAL ANALYSIS FROM THE JOINT HYPOTHESIS Economic Review quantity theory of money joint hypothesis inflation money supply GDP growth |
| title | REEXAMINING THE QUANTITY THEORY OF MONEY: AN EMPIRICAL ANALYSIS FROM THE JOINT HYPOTHESIS |
| title_full | REEXAMINING THE QUANTITY THEORY OF MONEY: AN EMPIRICAL ANALYSIS FROM THE JOINT HYPOTHESIS |
| title_fullStr | REEXAMINING THE QUANTITY THEORY OF MONEY: AN EMPIRICAL ANALYSIS FROM THE JOINT HYPOTHESIS |
| title_full_unstemmed | REEXAMINING THE QUANTITY THEORY OF MONEY: AN EMPIRICAL ANALYSIS FROM THE JOINT HYPOTHESIS |
| title_short | REEXAMINING THE QUANTITY THEORY OF MONEY: AN EMPIRICAL ANALYSIS FROM THE JOINT HYPOTHESIS |
| title_sort | reexamining the quantity theory of money an empirical analysis from the joint hypothesis |
| topic | quantity theory of money joint hypothesis inflation money supply GDP growth |
| url | http://er.ef.untz.ba/index.php/er/article/view/44 |
| work_keys_str_mv | AT chengwenlee reexaminingthequantitytheoryofmoneyanempiricalanalysisfromthejointhypothesis AT andriandolfriandrahuruta reexaminingthequantitytheoryofmoneyanempiricalanalysisfromthejointhypothesis |