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...

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Autores principales:	Cheng-Wen Lee, Andrian Dolfriandra Huruta
Formato:	article
Lenguaje:	EN
Publicado:	Faculty of Economics, University of Tuzla 2021
Materias:	quantity theory of money joint hypothesis inflation money supply gdp growth Economic theory. Demography HB1-3840 Business records management HF5735-5746 Finance HG1-9999
Acceso en línea:	https://doaj.org/article/c50f6b68cbe24c2bb0543ff2c273fd27
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spelling	oai:doaj.org-article:c50f6b68cbe24c2bb0543ff2c273fd272021-12-02T16:52:16ZREEXAMINING THE QUANTITY THEORY OF MONEY: AN EMPIRICAL ANALYSIS FROM THE JOINT HYPOTHESIS1512-89622303-680Xhttps://doaj.org/article/c50f6b68cbe24c2bb0543ff2c273fd272021-05-01T00:00:00Zhttp://ef.untz.ba/wp-content/uploads/2021/10/1_MAY_2021_DOI_pp_3_12.pdfhttps://doaj.org/toc/1512-8962https://doaj.org/toc/2303-680XThe 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. Cheng-Wen LeeAndrian Dolfriandra HurutaFaculty of Economics, University of Tuzlaarticlequantity theory of moneyjoint hypothesisinflationmoney supplygdp growthEconomic theory. DemographyHB1-3840Business records managementHF5735-5746FinanceHG1-9999ENEconomic Review, Vol XIX, Iss 01, Pp 3-12 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	quantity theory of money joint hypothesis inflation money supply gdp growth Economic theory. Demography HB1-3840 Business records management HF5735-5746 Finance HG1-9999
spellingShingle	quantity theory of money joint hypothesis inflation money supply gdp growth Economic theory. Demography HB1-3840 Business records management HF5735-5746 Finance HG1-9999 Cheng-Wen Lee Andrian Dolfriandra Huruta REEXAMINING THE QUANTITY THEORY OF MONEY: AN EMPIRICAL ANALYSIS FROM THE JOINT HYPOTHESIS
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
author	Cheng-Wen Lee Andrian Dolfriandra Huruta
author_facet	Cheng-Wen Lee Andrian Dolfriandra Huruta
author_sort	Cheng-Wen Lee
title	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_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_sort	reexamining the quantity theory of money: an empirical analysis from the joint hypothesis
publisher	Faculty of Economics, University of Tuzla
publishDate	2021
url	https://doaj.org/article/c50f6b68cbe24c2bb0543ff2c273fd27
work_keys_str_mv	AT chengwenlee reexaminingthequantitytheoryofmoneyanempiricalanalysisfromthejointhypothesis AT andriandolfriandrahuruta reexaminingthequantitytheoryofmoneyanempiricalanalysisfromthejointhypothesis
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REEXAMINING THE QUANTITY THEORY OF MONEY: AN EMPIRICAL ANALYSIS FROM THE JOINT HYPOTHESIS

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