Is Inflation Always and Everywhere a Monetary Phenomenon?*

Abstract Using a sample of about 160 countries over the last 30 years, we test for the quantity theory relationship between money and inflation. When analysing the full sample of countries, we find a strong positive relation between long‐run inflation and the money growth rate. The relation is not proportional, however. The strong link between inflation and money growth is almost wholly due to the presence of high‐(or hyper‐) inflation countries in the sample. The relationship between inflation and money growth for low‐inflation countries (on average less than 10% per annum over the last 30 years) is weak.