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Money Growth and Stock Market Volatility

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Rapid money-supply growth in recent years has received scant attention in the financial press. Since 1996, the M2 measure of money has increased at an average annual rate of more than 7%. With little or no evidence of accelerating inflation, strong money growth has been eclipsed by concerns that troubled foreign markets could undermine domestic economic conditions. Policy actions seem to have focused on assuaging fears that financial market disruptions in Asia and Eastern Europe could continue to spread.

Suggested citation: “Money Growth and Stock Market Volatility,” Federal Reserve Bank of Cleveland, Economic Trends, no. 98-12, pp. 05, 12.01.1998.

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