Empirical Relationships: The Inflation Rate

In this section, we continue utilizing the same functional forms to estimate the relationship between the inflation rate and dependent variables utilized to explain the countries’ exchange rates relative to the US. Table 31.6 provides a summary of the number of significant coefficients for the different variables yielded by the different equations. For example, the inflation equations using only the growth in the monetary base and the real GDP growth produces only seven statistically significant coefficients for the monetary base and only three for the real GDP growth rate in the countries in question. Table 31.7 presents the individual equations for the 32 countries in the sample. Table 31.6 shows ...

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