Monetary facts revisited

Abstract

BIS Working Papers are written by members of the Monetary and Economic Department of the Bank for International Settlements, and from time to time by other economists, and are published by the Bank. The papers are on subjects of topical interest and are technical in character. The views expressed in them are those of their authors and not necessarily the views of the BIS. This publication is available on the BIS website (www.bis.org).

Economic Sentiments and Money Demand Stability in the CEECs

“…Monetary developments are also relevant for the countries in our sample due to their impact on price evolution. Using the experience of 46 advanced and emerging economies on the time span 1950-2011, Gertler and Hofmann (2016) show that there is a stronger connection between inflation and money in emerging countries compared to advanced countries. Moreover, the inflation response to a monetary shock is found to be stronger in highly dollarized economies, Some of the studies based on the CEECs focus on the role of foreign exchange in determining the currency substitution between the domestic and foreign currency.…”

Money and inflation in inflation-targeting regimes – new evidence from time–frequency analysis

“…Roffia and Zaghini (2007) present evidence that the probability of an inflationary outburst increases, especially when money growth is accompanied by loose credit conditions and increases in stock and house prices. An increase in inflation or money growth would restore the strong link between money growth and inflation (Ellington & Milas, 2019;Gertler & Hofmann, 2018;Sargent & Surico, 2011). Therefore, monitoring monetary conditions and the monetary policy stance seem to be especially important during quantitative easing and when policy rates move toward their zero lower bound (Belongia & Ireland, 2018).…”

“…Moreover, the available post-crisis results are often not compared to the analogous findings for other inflation targeters and leading non-inflation targeters. The notable two exceptions are the articles of Breuer, Mcdermott, and Weber (2018) and Gertler and Hofmann (2018), which include the period until 2010 for 99 countries and until 2011 for 46 countries, respectively. However, the authors have constructed panels that do not include solely IT, limiting the possibility to draw IT-specific and country-specific conclusions.…”

“…Studies on the long-run (low-frequency) developments between money growth and inflation are of several types. An argument is that the long-run average changes in the quantity of money create an equal change of price inflation for cross-sections of countries (Gertler & Hofmann, 2018) -at least when high-inflation countries are in the sample. Band-pass filters are broadly used to extract low-frequency cycles.…”

Monetary Policy Crisis Management as a Threat to Economic Order

“…12 Given that since the mid 1980s the link between monetary policy decisions and consumer price inflation became increasingly weak (see for instance Gertler and Hofmann 2016), this opened the central banks the opportunity to pursue additional goals such as financial market stabilization and/or government financing without interfering with inflation targets as rule-based monetary policy approaches (Schnabl 2016). …”