Money and Swedish inflation |
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Affiliation: | 1. University of Duisburg‐Essen, Germany;2. DIW Berlin, Germany;3. IZA Bonn, Germany;4. German Council of Economic Experts, Germany;1. German Institute for Economic Research (DIW Berlin), Mohrenstr. 58, D-10117 Berlin, Germanyn;2. Freie Universität Berlin, Boltzmannstr. 20, D-14195 Berlin, Germany |
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Abstract: | Analysing the role of money for Swedish inflation, we apply a single equation “P-Star” model and a structural VECM for the period of the late 1980s to the beginning of 2005. Against the background of theoretical and empirical considerations, we find that money – when measured by the “price gap” or, alternatively, the “money overhang” – had a statistically significant impact on future price movements. The results suggest that money might have to play a more prominent role in monetary policy making in Sweden compared with the status quo. |
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