| Abstract: | This paper provides a brief review and critique of some of the results and conclusions of Melvin 1983] concerning the effects of inflation on the response pattern of interest rates to changes in money growth rates. It also presents results concerning the significance of two different measures of the inflationary environment ––– the actual rate of inflation and the variance of the inflation rate ––– in explaining this response. The conclusion drawn here is that the variance of the inflation rate better explains the changing money-interest relationship. This conclusion is rather different from that of Melvin. |
