Is the Quantity Theory of Money Useful in Forecasting U.S. Inflation

摘要: We propose a new simple model incorporating the implication of quantity theory money that growth and inflation should move one for in long run, and, hence, be predictable by growth. The fits postwar U.S. data well, beats common univariate benchmark models forecasting inflation. Moreover, this evidence is quite robust, predictability found also Great moderation period. detected lends support to theory.