Empirical Evidence for the Quantity Theory of Money: Romania – A Case Study

Abstract

The quantity theory of money is one of the most important theoretical propositions in monetary economic theory. However, in recent days more and more economists contest its validity. In this article we will attempt to offer additional empirical support for the quantity theory of money. We argue that the variation in the consumer price index (CPI) in Romania in the last six years can be fully explained by the variation in the supply of money.

Keywords

• consumer price index (CPI)
• money supply
• purchasing power
• regression analysis
• the quantity theory of money