Money growth and inflation Summary


Money growth and inflation

Allan Meltzer, a great economist, made an observation that most staffs of Central Bank, majority of working economists as well as market practitioners hardly make use of money growth for prediction of inflation and that most of them rely on theoretical relations or Phillip’s Curve. The perception that the growth of money is entirely not relevant for inflation is quite surprising. One of the ancient and most held economics propositions is the idea which suggests that persistent variations in the level of prices are directly linked with the money supply. Several economists have repeatedly observed that continuous increase in prices of goods is directly attributed to the nominal quantity of money.

This essay will major on the subject of money growth and inflation. For instance, it will analyze economic news reports like the News Release by the Bank of England which sought to establish the role played by the monetary policy regarding Inflation and Growth.


Monetary inflation is an economic terminology that refers to a sustained rise in the supply of money in an economy of any given country. It normally leads to price inflation, that is, a general increase in price levels of products. Economists generally agree that there exists a causal relationship between the demand and supply of money, as well as prices of services and goods often quantified in monetary terms. However, there is no overall consensus pertaining to the exact relationship and mechanism between monetary inflation and price inflation.  There are a sophisticated system and various arguments put forward towards the issues that are involved, for instance how accurately determine monetary base, and or how other factors like money velocity impact the relationship and the most appropriate monetary policy.

Review of previous literature shows that price levels and nominal money quantity variations are closely interwoven. Although the debate has been going on for long with substantial evidence being given, there still remains some dispute between the predicted link between inflation and money. One of the possible explanations given towards this is that the said relationship holds only over periods of time which are so long thus making the relationship uninformative for policymakers and practitioners, who concern themselves with inflation in the future, say like the next five months or a year. However, the said relationship cannot be overlooked because it has been backed with substantial evidence. Economists have to make monetary policies bearing in mind this consideration.

Monetary policies have to play significant roles in enhancing economic growth and development in any economy. Spenser Dale, when addressing the Chinese Business Association and Asian Business Association of London Chamber of Commerce and industry, gave out his opinions regarding the monetary policy objectives. Particularly, Dale considered the monetary policy’s flexibility to support employment and growth and also control inflation. He also considered the possibilities of presently having scope for additional growth without creating extra price inflation. Spencer welcomed the present interest in such crucial issues and noted that the financial crisis was partly associated with the failure of the monetary policies. In many nations like the UK, monetary policies failed to activate the growth people longed to have.

Some players have often asked if the UK’s regime that targets inflation does force the MPC to emphasize too much on inflation, instead of supporting growth recovery. In tackling this, Spenser noted that from its generation the core mission of MPC was to hit a target of 2% inflation, but in a manner that it will support employment and growth. The MPS, he explained, has always done achieved that and brought recovery after the economic financial crisis aftermath.

According to his report, Consumer Price Index (CPI) has been over the set 2% target for the majority of the past five years with an over the same period, Bank Rates were cut to 0.5% all the way from 5%. He went on to explain that there had been launched a special scheme for funding entrepreneurs through lending as a way of stimulating growth in the economy through availing credit. Spencer noted that it is because of credibility that monetary policies got the flexibility for supporting the real economy.

Other people have asked if the setting of the policy of the MPC has actually not been adequately based on inflation, that the aim is a “sham”. To this, Spenser noted that the flexibility that MPC’s remit allowed is dependent on the bottlenecks that inflation has to be taken back to the set target and this is to be done in such a manner which maintains the credibility of the target. As such the target is a crucial anchor rather than a sham.

And should this credibility be lost, the challenge on supporting employment and growth will be much more tightly binding some years to come. Low inflation provides the means to sustained economic growth and thus improved standards of living. It should, therefore, be a concern of the makers of monetary policies to evaluate the implications of their actions towards the real economy- for the strengthening of employment and output growth. It is therefore enticing and seductive to argue that it is possible to have the economy grow without a significant rise in inflationary level.


However, it is not economically justifiable by the inflation behaviour about ignoring the growth of money in attempts to predict future inflation. A proportional relationship that is positive between money and price level relative to real income has been found to be consistent with the literature review from previous researchers in this subject. The relationship between money growth and inflation is evident in data that has been made available for long periods of time as well as over shorter durations for many nations.

In the United States, the divergence between money growth and price level relative to income in the early 1990s looks to be transitory in nature and it is not unusual especially when the view is made in a longer perspective. To adhere to the economic goals of fostering growth and employment through proper utilization of resources, the emphasis is made that monetary policies have to factor in the relationship between money quantity and inflation. Although some inflation is necessary for economic growth, it should consider the living standards of citizens.

Work cited

Leamer, Edward E., 1985. “Vector autoregressions for causal inference?,” Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 22(1), pages 255-304, January.

Granger, C W J, 1969. “Investigating Causal Relations by Econometric Models and Cross-Spectral Methods,” Econometric a, Econometric Society, vol. 37(3), pages 424-38, July.

Stanley Fischer, 1993. “The Role of Macroeconomic Factors in Growth,” NBER Working Papers 4565, National Bureau of Economic Research, Inc.

Fischer, Stanley, 1993. “The role of macroeconomic factors in growth,” Journal of Monetary Economics, Elsevier, vol. 32(3), pages 485-512, December.




Get Professional Assignment Help Cheaply

Buy Custom Essay

Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?

Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.

Why Choose Our Academic Writing Service?

  • Plagiarism free papers
  • Timely delivery
  • Any deadline
  • Skilled, Experienced Native English Writers
  • Subject-relevant academic writer
  • Adherence to paper instructions
  • Ability to tackle bulk assignments
  • Reasonable prices
  • 24/7 Customer Support
  • Get superb grades consistently

Online Academic Help With Different Subjects


Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.


Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.

Computer science

Computer science is a tough subject. Fortunately, our computer science experts are up to the match. No need to stress and have sleepless nights. Our academic writers will tackle all your computer science assignments and deliver them on time. Let us handle all your python, java, ruby, JavaScript, php , C+ assignments!


While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.


Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.


In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.


Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.


We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!


We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.


Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.

What discipline/subjects do you deal in?

We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.

Are your writers competent enough to handle my paper?

Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.

What if I don’t like the paper?

There is a very low likelihood that you won’t like the paper.

Reasons being:

  • When assigning your order, we match the paper’s discipline with the writer’s field/specialization. Since all our writers are graduates, we match the paper’s subject with the field the writer studied. For instance, if it’s a nursing paper, only a nursing graduate and writer will handle it. Furthermore, all our writers have academic writing experience and top-notch research skills.
  • We have a quality assurance that reviews the paper before it gets to you. As such, we ensure that you get a paper that meets the required standard and will most definitely make the grade.

In the event that you don’t like your paper:

  • The writer will revise the paper up to your pleasing. You have unlimited revisions. You simply need to highlight what specifically you don’t like about the paper, and the writer will make the amendments. The paper will be revised until you are satisfied. Revisions are free of charge
  • We will have a different writer write the paper from scratch.
  • Last resort, if the above does not work, we will refund your money.

Will the professor find out I didn’t write the paper myself?

Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.

What if the paper is plagiarized?

We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.

When will I get my paper?

You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.

Will anyone find out that I used your services?

We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.

How our Assignment  Help Service Works

1.      Place an order

You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.

2.      Pay for the order

Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.

3.      Track the progress

You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.

4.      Download the paper

The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.

smile and order essaysmile and order essay PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A PERFECT SCORE!!!

order custom essay paper