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LUND UNIVERSITY LIBRARIES

Money Matters

Åkesson, Nelly LU and Karlberg, Truls (2024) NEKN01 20241
Department of Economics
Abstract
This thesis investigates the time-varying relationship between inflation and money supply using a state space model. We use an extensive dataset with data over the years 1870-2023 and analyze the countries Sweden, the United States, and the United Kingdom. The results show that the link between money supply and inflation seems to depend on the underlying inflationary and monetary regime. During periods of higher inflation and unstable economic conditions, the link is stronger. Furthermore, we find a positive and increasing relationship between money supply and housing prices. During periods when the link between CPI and money supply is at histori- cally weak levels, the link between money supply and housing prices is at historically strong... (More)
This thesis investigates the time-varying relationship between inflation and money supply using a state space model. We use an extensive dataset with data over the years 1870-2023 and analyze the countries Sweden, the United States, and the United Kingdom. The results show that the link between money supply and inflation seems to depend on the underlying inflationary and monetary regime. During periods of higher inflation and unstable economic conditions, the link is stronger. Furthermore, we find a positive and increasing relationship between money supply and housing prices. During periods when the link between CPI and money supply is at histori- cally weak levels, the link between money supply and housing prices is at historically strong levels. Money growth may thus manifest in asset price inflation. (Less)
Please use this url to cite or link to this publication:
author
Åkesson, Nelly LU and Karlberg, Truls
supervisor
organization
alternative title
A time varying State Space approach to the relationship between inflation and money supply
course
NEKN01 20241
year
type
H1 - Master's Degree (One Year)
subject
keywords
Monetary policy, inflation, state space model, asset price inflation, inflationary regime, quantity theory of money
language
English
id
9170466
date added to LUP
2024-10-01 13:10:32
date last changed
2024-10-01 13:10:32
@misc{9170466,
  abstract     = {{This thesis investigates the time-varying relationship between inflation and money supply using a state space model. We use an extensive dataset with data over the years 1870-2023 and analyze the countries Sweden, the United States, and the United Kingdom. The results show that the link between money supply and inflation seems to depend on the underlying inflationary and monetary regime. During periods of higher inflation and unstable economic conditions, the link is stronger. Furthermore, we find a positive and increasing relationship between money supply and housing prices. During periods when the link between CPI and money supply is at histori- cally weak levels, the link between money supply and housing prices is at historically strong levels. Money growth may thus manifest in asset price inflation.}},
  author       = {{Åkesson, Nelly and Karlberg, Truls}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Money Matters}},
  year         = {{2024}},
}