Economics, Econometrics and Finance
4 years ago

Money printing not directly linked to inflation, challenging traditional economic beliefs.

Proceedings of International Conference on Business Management
MONEY PRINTING AND INFLATION: FUNDAMENTALS AND CAUSAL RELATIONSHIPS
Ranasinghe Arachchige Anil Perera

Paper Summary

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Central Banks print money to release into the economy, which affects the amount of money in circulation. This process is based on economic reasons and is different from funding government deficits. Money supply changes can impact inflation in the long term. A study on credit to government and inflation in various countries found no direct one-to-one relationship, but did show strong connections between money supply changes and inflation with some delay. This suggests that the direct link between government credit and inflation is not as clear-cut as previously thought.