Empirical Causality between Bigger Banknotes and Inflation
January 2006
Article
pp 751-752.
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Monetary theory predicts that high inflation rates may imply the need for bigger banknotes. At the same time, monetary authorities may fear that introducing higher-valued banknotes leads to inflation. This paper concerns an analysis of 40 years of data on inflation and denominations for 59 countries, and it reports that causality runs from inflation to banknotes and not the other way around.
Keywords
- econometrics
- economic aspects
- empirical research
- inflation (finance)
- bank notes
- monetary theory
- price levels
