Quantity Theory of Money

After reading Scott Sumner's Short Intro Course on Money, I wanted to take a more in-depth look at the data set he uses to support the quantity theory of money. The data referenced in Sumner's post comes from Robert Barro's textbook Macroeconomics. I use a similar data set from Barro's newer textbook Macroeconomics: A Modern Approach.

Barro's data includes four columns of information for each country: Inflation rate, Growth rate of currency, Growth rate of real currency, and Growth rate of real GDP (I ignore the fifth column in the book: 1980-2000 Inflation rate). In addition, I computed Growth rate of velocity, Price change 1960 - 2000, Real GDP Change, and Velocity Change, which are all implied by the first four columns.

To get a feel for how the variables interact with each other, I plotted each of the rate of change variables against the others in a matrix of scatterplots. I also include a table that shows all of the monetary variables.

Monetary Variable Matrix

The matrix below shows the variables of the data set, each plotted against the others. The title indicates the y-axis variable in its row and the x-axis variable in its column. Using the mouse, you can select a range of points to focus on the distribution of these points in the various plots.


Sources and Acknowledgements

I (Chandrasekhar Ramakrishnan) implemented this visualization using Mike Bostock's scatterplot matrix example as a starting point. The data comes from Robert Barro's Macroeconomics: A Modern Approach (Chapter 11, Table 11.1). If you would like to play with the data yourself, you can download the data.

If someone can point me to data for the variables of the Keynesian and MMT models of inflation and real GDP growth, I'd be happy to visualize those as well.