Monetary facts revisited

This paper uses data from 46 economies over the post-war period to revisit two key monetary facts: (i) the link between money growth and inflation and (ii) the link between credit growth and financial crises. The analysis reveals that the former has weakened over time, while the latter has become stronger. This suggests that there is an inverse relationship between the two monetary facts. The money-inflation link is weak and the credit-crisis nexus is strong when inflation is low and financial systems are liberalised, while the reverse holds true in environments of high inflation and less liberalised financial systems.