Some economists advocate focusing less emphasis on monetary aggregates because the relationship of monetary aggregates to the ultimate goals of monetary policy is less reliable now than in the past. But the stability of the relationship between money growth and inflation is a testable...

We consider what, if any, relationship there is between monetary aggregates and inflation, and whether there is any substantial reason for modifying the current mainstream mode of policy analysis, which frequently does not consider monetary aggregates at all. We begin by considering the body of...

Presentation to the Western Economic Association International, San Francisco, CA, July 2, 2012

Remarks at the Association for a Better New York Breakfast Meeting, Grand Hyatt, New York.

Textbook monetary theory holds that increasing the money supply leads to higher inflation. However, the Federal Reserve has tripled the monetary base since 2008 without inflation surging. With interest rates at historically low levels and the economy still struggling, the normal money multiplier...

Presentation to the Western Economic Association International, San Francisco, CA, July 2, 2012

Textbook monetary theory holds that increasing the money supply leads to higher inflation. However, the Federal Reserve has tripled the monetary base since 2008 without inflation surging. With interest rates at historically low levels and the economy still struggling, the normal money multiplier...