Some International Evidence on the Quantity Theory of Money.

This article presents information on the quantity theory of money, which implies that a given change in the rate of growth of the quantity of money provokes an equal change in the rate of growth of income and inflation. The authors combine two existing forms of the theory to create a two-equation macroeconomic model that displays the action of money, prices and interest rates. Data from 1962-1988 is tested to determine if classical monetary forces can explain the behavior of inflation and interest rates.