The quantity theory in New England, 1703-1749: new data to analyze an old question

The finding of Robert West that the classical quantity theory of money clearly holds for New England (at variance with results for the rest of Colonial America) is revisited, with care taken to guard against spurious data and spurious regression. Thus alternative measures of price and money and modern econometric techniques are employed. The quantity theory of Milton Friedman is shown to be complementary to classical quantity theory, and both theories are tested via modern time-series analysis. The West data lead to mixed results; but the new data and technique support both quantity theories.     

The circulating medium of exchange in colonial Pennsylvania, 1729–1775: new estimates of monetary composition, performance, and economic growth

Market transaction data are used to estimate the quantity of specie in circulation. This estimate is used to provide the first comprehensive measure of a colony's money supply and, along with data on population and prices, to retest the quantity theory of money and measure output growth using the equation of exchange. Output growth is found to depend on periodization and the extent that rising commercialization increased the velocity of circulation. Specie was becoming relatively less scarce as the Revolution approached, and movements in specie and paper currency both offset and reinforced each other depending on the period of analysis. (JEL N11, N21, E42, E51)