I'm not sure it makes sense to look at correlation coefficients when, if excessive M2 drives inflation, there will be a lag between them.
Just eyeballing it, until 1980 there is about a 5-year lag between the shape of M2 and inflation, and as time goes by the lag becomes shorter and shorter. It would be interesting to do a correlation with a gradually-decreasing lag time. Maybe it could be done the other way around, to calculate the lag-time function that maximizes the correlation between M2 and inflation.
It does make some intuitive sense that increasing computerization and internet usage would shorten lag times.
I'm not sure it makes sense to look at correlation coefficients when, if excessive M2 drives inflation, there will be a lag between them.
Just eyeballing it, until 1980 there is about a 5-year lag between the shape of M2 and inflation, and as time goes by the lag becomes shorter and shorter. It would be interesting to do a correlation with a gradually-decreasing lag time. Maybe it could be done the other way around, to calculate the lag-time function that maximizes the correlation between M2 and inflation.
It does make some intuitive sense that increasing computerization and internet usage would shorten lag times.