Real supply shocks drive money growth and inflation relationship, impacting global economy.
Real supply shocks can impact how money growth and inflation are related. While in the long run they are usually linked, short-term deviations occur. The study shows that these short-term deviations can be due to global real supply shocks affecting the economy. The research provides evidence that in the long run, the rate of money growth and inflation are indeed closely related in the United States.