A Striking Result or just a Matter of Misinterpretation?
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A Striking Result or just a Matter of Misinterpretation?
Comment on “Inflation Rates and Money Growth During High-Inflations”
Wesche, Katrin | Wierum, Susanne
Credit and Capital Markets – Kredit und Kapital, Vol. 28 (1995), Iss. 2 : pp. 216–220
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Katrin Wesche, Bonn
Susanne Wierum, Bonn
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Gersbach, Hans, 1993: “Inflation Rates and Money Growth During High-Inflations”, Kredit und Kapital, Vol. 26, No. 2, 230 - 237.
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Abstract
This comment refers toa paper by Gersbach (1993) on the relationship between money growth and inflation. Contrary to Gersbach’s result it is shown that fully anticipated accelerating money growth leads to accelerating inflation. Starting from a money demand function of the Cagan-type, the forward looking rational expectations solution is derived and the relation between money growth and inflation is established.