Monetary aggregates in the US since 2020 and post-COVID-19 inflation

Beretta, Edoardo; Neuberger, Doris

doi:10.17811/ebl.12.4.2023.321-330

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Beretta_2023_Oviedo University Press_Econ Bus Lett

Journal article

Monetary aggregates in the US since 2020 and post-COVID-19 inflation : evidence from the equation of exchange

Beretta, Edoardo ORCID Istituto di economia politica (IdEP), Facoltà di scienze economiche, Università della Svizzera italiana, Svizzera
Neuberger, Doris Department of Economics, University of Rostock, Germany

2023

Published in:

Economics and Business Letters. - 2023, vol. 12, no. 4, p. 321-330

Irving Fisher’s equation of exchange

English Starting from Irving Fisher’s equation of exchange ( ) at the basis of the quantity theory of money, we analyze from a theoretical macroeconomic-monetary perspective whether the increase of monetary aggregates M1 and M2 might have affected general prices. Moreover, we investigate why monetary aggregates have evolved differently for COVID-19 than in the global financial crisis (2007-2009). The article elaborates on data for the US from Q1/2020 to Q2/2022 and represents the first scientific contribution to the analysis of post-COVID-19 inflation by means of the equation of exchange. We find that money growth seems to have contributed to inflation supporting the “monetarist” view, but that non-monetary drivers such as supply shocks and increasing profit margins outweigh the monetary ones.

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