Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/88194
Authors: 
Belke, Ansgar
Polleit, Thorsten
Year of Publication: 
2007
Series/Report no.: 
ROME Discussion Paper Series 07-02
Abstract: 
We turn our attention to the role of money for determining nominal magnitudes. Using US data, we find that the aggregate 'nominal output plus and stock market capitalisation' is closely related to the money stock, lending support to one of Milton Friedman's key monetarist propositions. This finding should be particularly important for ECB monetary policy: an inflation-free euro plays a crucial role for European economic and political integration. We conclude that monetary policy must keep a very close eye on money supply if it wants to prevent consumer and/or asset price inflation.
Subjects: 
Money
asset price inflation
monetary policy
JEL: 
C22
E52
G12
Document Type: 
Working Paper

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