A testable implication of the modern quantity theory of money, when viewed as a theory of inflation, is the joint hypothesis that (i) there is a one-to-one positive relationship between inflation and the money stock growth rate, (ii) there is a one-to-one negative relationship between inflation...

It is now generally accepted that there is a negative relationship between inflation and central bank independence (CBI). This study finds that inflation and CBI are endogenously determined, yet the negative correlation between the two remains robust.