MONEY MULTIPLIER IMPACT ON INFLATION IN REPUBLIC OF SERBIA

Dušan Perović, Marina Đorđević

DOI Number
10.22190/FUEO1701031P
First page
031
Last page
041

Abstract


The essential research intention in this paper is oriented toward considering the nature of money multipliers and their impact on inflation in Republic of Serbia. The analysis of research data includes data during period of 1997-2015 in order to achieve more effective results. Obtained results, after implementing adequate statistical procedures, emphasize the existence of negative and significant correlation between money multiplier m3 and inflation. Since M3 represents basis for forming m3 multiplier, this implicates that wider range of assets in monetary aggregate M3 have greater impact on inflation than other two monetary aggregates. Therefore, one of tasks for central banks should be higher control of M3 through m3 money multiplier analysis in order to prevent higher fluctuations in inflation rate.


Keywords

Money multiplier, core inflation, m1, m2, m3, monetary base, central bank

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DOI: https://doi.org/10.22190/FUEO1701031P

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