The quantity theory in New England, 1703-1749: new data to analyze an old question

The finding of Robert West that the classical quantity theory of money clearly holds for New England (at variance with results for the rest of Colonial America) is revisited, with care taken to guard against spurious data and spurious regression. Thus alternative measures of price and money and modern econometric techniques are employed. The quantity theory of Milton Friedman is shown to be complementary to classical quantity theory, and both theories are tested via modern time-series analysis. The West data lead to mixed results; but the new data and technique support both quantity theories.