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Description

After the 2008 recession, the Federal Reserve initiated an aggressive policy of monetary easing. In this study, I examine the relationship between money supply growth and inflation using Personal Consumption Expenditures (PCE-All) as my measure of inflation. I develop univariate regression models with M1, M2, and MZM as the independent variables and PCE-All as the dependent variable. I test the hypothesis that the slope coefficients are positive and statistically significant (T-Stats > 2). I also forecast 2018 PCE-All inflation rates to determine the forecasting accuracy of the models. My forecasts also take into account the root mean square forecasting error (RMSE).

Publication Date

4-24-2019

Project Designation

Independent Research

Primary Advisor

Tony S Caporale, Robert D Dean

Primary Advisor's Department

Economics and Finance

Keywords

Stander Symposium poster

Comments

Presenter: Reed Thomas Aleck

Money Supply Growth and Inflation Trends Post 2008 Recession: A Closer Look at the PCE Inflation Index

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