ABSTRACT
Forty years have already passed since the famous statement of Milton Friedman that inflation is always and everywhere a monetary phenomenon (Friedman, 1963). However, the issue still generates controversy among economists. In applied analysis this issue is often reduced to an attempt to answer the question, ‘Is inflation always and everywhere a monetary phenomenon?’ There are two main groups of empirical research here: 1) use of cross-section data on a large number of countries over a long time span (usually, average data for the time period are taken); 2) use of time series for a single country. In the first case, commonly, the correlation coefficients between growth rates of money supply and inflation rates are calculated; in the second case, as a rule, the emphasis is laid on the analysis of the long-run relationship between money supply and price level. Among the voluminous research on the relationship between money supply growth and inflation one can find both papers supporting the viewpoint of the monetary nature of inflation and papers calling it into question.
