Scandinavian journal of economics vol:107 issue:2 pages:239-259
Using a sample of about 160 countries over the last 30 years, we test for the quantity theory relationship between money and inflation. When analysing the full sample of countries, we find a strong positive relation between long-run inflation and the money growth rate. The relation is not proportional, however. The strong link between inflation and money growth is almost wholly due to the presence of high-(or hyper-) inflation countries in the sample. The relationship between inflation and money growth for low-inflation countries (on average less than 10% per annum over the last 30 years) is weak.