Prague Economic Papers 2009, 18(1):48-60 | DOI: 10.18267/j.pep.341

On the relationship between real and nominal variables in developed countries

Petr Duczynski
Department of Economics, Faculty of Informatics and Management, University of Hradec Králové, Rokitanského 62, CZ - 500 03 Hradec Králové (petr.duczynski@uhk.cz).

The paper examines money-output and price-output relations in developed countries between 1980 and 2005. We observe that declines in the nominal monetary base are connected with a moderately below-average behaviour of the real output. The same result applies for small positive growth rates of nominal M1 and M2. High growth rates of money are associated with the above-average product growth. We have some evidence that broader monetary aggregates are more closely associated with the real product than narrower monetary aggregates. As opposed to the money-output connection, we show that low inflation was accompanied by high product growth.

Keywords: consumer prices, real output, developed countries, nominal monetary aggregates
JEL classification: E31, E40, O40

Published: January 1, 2009  Show citation

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Duczynski, P. (2009). On the relationship between real and nominal variables in developed countries. Prague Economic Papers, 18(1), 48-60. doi: 10.18267/j.pep.341
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