Money Supply Growth and Inflation Trends Post 2008 Recession: A Closer Look at the PCE Inflation Index

After the 2008 recession, the Federal Reserve initiated an aggressive policy of monetary easing. In this study, I examine the relationship between money supply growth and inflation using Personal Consumption Expenditures (PCE-All) as my measure of inflation. I develop univariate regression models with M1, M2, and MZM as the independent variables and PCE-All as the dependent variable. I test the hypothesis that the slope coefficients are positive and statistically significant (T-Stats \u3e 2). I also forecast 2018 PCE-All inflation rates to determine the forecasting accuracy of the models. My forecasts also take into account the root mean square forecasting error (RMSE).https://ecommons.udayton.edu/stander_posters/2552/thumbnail.jp