Quantity theory of money: the hypothesis of the dichotomy between relative prices and absolute prices | Zendy

Tito Belchior Silva Moreira | Zendy; Mário Jorge Cardoso de Mendonça | Zendy; Adolfo Sachsida | Zendy; Benjamin Miranda Tabak | Zendy

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Quantity theory of money: the hypothesis of the dichotomy between relative prices and absolute prices

Author(s) -

Tito Belchior Silva Moreira,

Mário Jorge Cardoso de Mendonça,

Adolfo Sachsida,

Benjamin Miranda Tabak

Publication year - 2017

Publication title -

revista de economia

Language(s) - English

Resource type - Journals

eISSN - 2316-9397

pISSN - 0556-5782

DOI - 10.5380/re.v41i1.41382

Subject(s) - economics , relative price , money supply , stock (firearms) , moneyness , econometrics , quantity theory of money , price level , monetary economics , monetary policy , mechanical engineering , engineering

This paper aims to investigate the impact of a change in the quantity of money on relative prices based on quarterly time-series for the period 1959-2013 of the U.S. economy. The econometric results show evidence that a change in the money supply affects the relative prices. This result does not corroborate the assumption that changes in relative prices only occur due to changes in real variables, but changes in relative prices also occur via changes of the money stock. In this sense, there is no empirical evidence that the hypothesis of the dichotomy between relative prices and absolute prices is valid.

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