Published Online: Oct 07, 2015
Page range: 137 - 146
Received: Apr 17, 2015
Accepted: May 06, 2015
DOI: https://doi.org/10.1515/jcbtp-2015-0015
Keywords
© Central Bank of Montenegro
This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.
In this paper we test the existence of long-term relationship between money supply and inflation, money supply and GDP and money supply and unemployment. Three independent panel cointegration regressions are evaluated where money supply is the explanatory variable, while inflation, GDP and unemployment rates occur as dependent variables. The sample consists of 17 countries (Australia, Canada, Chile, Denmark, Israel, Japan, South Korea, Mexico, New Zealand, Poland, Switzerland, United Kingdom and United States). The data are annual and refer to the period from 1990 to 2013. The results of the empirical analysis in this paper show that there is no significant long-term relationship between inflation and money supply, while there is statistically significant long-term relationship between GDP and money supply, as well as between unemployment rates and the money supply.