Synopsis
Well known economist and Nobel Laureate Milton Friedman’s theory which guided monetary policy through the world in the second half of twentieth century said that inflation is a monetary phenomenon and it occurs when too much money chases too few goods. Excess money creation, or unrestrained expansion in the balance sheet size of a central bank, accordingly, has been vaunted as the prime driver of inflation.
It is said that too much money chasing too few goods is inflationary. But that may be only partially true. Empirical results of study by RBI economists suggest that money growth does not pose risks to inflation in the presence of economic slack.
Well known economist and Nobel Laureate Milton Friedman’s theory which guided monetary policy through the world in the second half of twentieth century said that inflation is a monetary phenomenon and it occurs when too much money chases too few goods. Excess money creation, or unrestrained expansion in the balance sheet size of a central bank, accordingly, has been vaunted as the prime driver of inflation.
..
