Instant Access to the Journals you Need

Read Online + Print Articles, for just $40 a month.

Start Your Free Trial

Does high M4 money growth trigger large increases in UK inflation? Evidence from a regime-switching model

Does high M4 money growth trigger large increases in UK inflation? Evidence from a regime-switching model

Abstract

March 2007 saw an increase of 3.1% in UK inflation and triggered the first explanatory letter from the Governor of the Bank of England to the Chancellor of the Exchequer since the Bank of England was granted operational independence in May 1997. The letter gave rise to a lively debate on whether policymakers should pay attention to the link between inflation and M4 money growth. Using UK data since the introduction of inflation targeting in October 1992, we show that: (i) the relationship between inflation and M4 growth is not stable over time, and (ii) the tendency of M4 to exert inflationary pressures is conditional on annual M4 growth exceeding 9.8%. Above this threshold, the money effect on inflation is very small. The implication is that the Monetary Policy Committee should not be particularly worried for not paying close attention to M4 money movements when setting interest rates.
Loading next page...
 
/lp/oxford-university-press/does-high-m4-money-growth-trigger-large-increases-in-uk-inflation-VWNw161wj0

You're reading a free preview. Subscribe to read or print the entire article.

And millions more from thousands of peer-reviewed journals, for just $40/month.

Start Your Free Trial

What content is in DeepDyve?

  • Read and share from thousands of the leading scholarly journals from Springer, Elsevier, Nature, IEEE, Wiley-Blackwell and more.
  • All the latest content is available, no embargo periods.

Rent Scholarly Articles?

  • Read the full article in your browser.
  • Each month you can print 20 pages for free.
  • Access all of your rentals from the cloud anywhere you have an internet connection.
  • Beautiful reading experience – Full charts and figures, just like the PDF.
  • Read as much as you'd like - whenever you'd like.

Happy Users

“In one word renting from DeepDyve is FANTASTIC!!! ... 99% of the time I only need access to an article for a month or so, so renting the articles is perfect for me.”

Adam S.

“Thanks for a great service! For an unaffiliated science blogger like myself this is like a dream come true.”

Seppo P.

“Hi guys, I cannot tell you how much I love this resource. Incredible. I really believe you've hit the nail on the head with this site in regards to solving the research-purchase issue.”

Daniel C.

“Let me seize this opportunity and congratulate you on the service you are rendering to the scientific community.”

Joao B.