Claudio Borio, Boris Hofmann and Egon Zakrajšek in this BIS Bulletin article:
- The strength of the link between money growth and inflation depends on the inflation regime: it is one-to-one when inflation is high and virtually non-existent when it is low.
- A link can also be seen in the recent possible transition from a low- to a high-inflation regime. An upsurge in money growth preceded the inflation flare-up, and countries with stronger money growth saw markedly higher inflation.
- Looking at money growth would have helped to improve post-pandemic inflation forecasts, suggesting that its information value may have been neglected.
Will monetary aggregates make a comeback?
Mostly Economics 