Real Money and Economic Growth

BLINOV, Sergey (2015): Real Money and Economic Growth.

Abstract

People recognized the important role played by money in the economy a long time ago. However, it was only approximately 50 years ago that Milton Friedman convincingly proved that change in the quantity of money in the economy might have a very serious effect on the GDP. This paper reveals a most intimate non-linear linkage between growth of real GDP and growth of real money supply using the example of a number of countries and unions (Russia, Japan, Brazil and Eurozone). It is shown that exponential growth of real money supply corresponds to linear growth of real GDP. Hypotheses are advanced which explain such a nature of the inter-linkage. A number of practical recommendations are given which pertain, first of all, to monetary policy.

• Item Type: MPRA Paper
• Language: English
• Keywords: GDP, economic growth, money supply, monetary policy, Central Banks
• Subjects: E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E41 - Demand for Money; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E50 - General; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E51 - Money Supply ; Credit ; Money Multipliers; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy > O23 - Fiscal and Monetary Policy in Development; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O42 - Monetary Growth Models

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