IESET.
Hypotheses·monetary·central_bank_balance_sheet_cpi_decoupling_panel_2008_2020

Across the Federal Reserve, Bank of Japan, ECB, and Bank of England, the cumulative central-bank-balance-sheet expansion 2008-2020 exceeded 30% of GDP at each institution while cumulative core-CPI divergence from each institution's pre-2008 trend remained within ±2 percentage points and inflation-expectations 5y5y forwards remained within their pre-2008 anchored ranges.

The cross-institution panel decoupling of base-money expansion from CPI inflation refutes the strong quantity-theoretic transmission prediction at advanced currency-issuers and is consistent with the PK endogenous-money / reserves-vs-broad-money distinction that animates heterodox monetary theory.

INCONCLUSIVEengine/runs/central_bank_balance_sheet_cpi_decoupling_panel_2008_2020

INCONCLUSIVE_DATA_PENDING — insufficient observations after listwise deletion (13)

confidence cueResult card produced; verdict unclassified.

policy briefCoverage too thin

In ordinary language

In plain terms, this asks whether central bank balance sheet pct income is actually linked to better or worse core cpi inflation yoy from 2008 to 2020.

plain answer

This test cannot make a firm call yet. insufficient observations after listwise deletion (13)

why it matters

This matters because monetary claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 8 country or place units from 2008 to 2020, using a panel fe design, with fixed effects for country and year.

what was measured
What changed
  • Central bank balance sheet pct income
  • Monetary base growth
What we checked
  • Core cpi inflation yoy
  • Core cpi divergence from pre2008 trend
  • Inflation expectations 5y5y forward
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/central_bank_balance_sheet_cpi_decoupling_panel_2008_2020
1007550250200820142020USAJPNGBRDEUFRAITAESP
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show core_cpi_inflation_yoy across 8 sampled countries over 2008–2020.
The shapes above are stylised — none of the lines are real data.
Placeholder for central_bank_balance_sheet_cpi_decoupling_panel_2008_2020. Published chart will be generated from engine/runs/central_bank_balance_sheet_cpi_decoupling_panel_2008_2020/chart_data.json.

Pre-registration

registration ordering unverified
first-spec commit 4c8ce8e · 2026-07-18T22:11:21Z
run generated · 2026-06-29T17:54:13Z
Run timestamp predates this path's first git-add commit (rebase, rename, or pre-git local run). Spec hash is still the path's first-add commit — not repository HEAD — but ordering is not a clean pre-registration proof.

Across the Federal Reserve, Bank of Japan, ECB, and Bank of England, the cumulative central-bank-balance-sheet expansion 2008-2020 exceeded 30% of GDP at each institution while cumulative core-CPI divergence from each institution's pre-2008 trend remained within ±2 percentage points and inflation-expectations 5y5y forwards remained within their pre-2008 anchored ranges. The cross-institution panel decoupling of base-money expansion from CPI inflation refutes the strong quantity-theoretic transmission prediction at advanced currency-issuers and is consistent with the PK endogenous-money / reserves-vs-broad-money distinction that animates heterodox monetary theory.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

The hypothesis is falsified if any of the following hold over 2008-2020 across the four institutions: (a) cumulative core-CPI divergence from each institution's pre-2008 5y trend exceeds 2 percentage points in any 6-month window in any of the four economies, (b) inflation-expectations 5y5y forward exits the pre-2008 anchored range (defined as ±0.75 pp around the pre-2008 mean) in any of the four jurisdictions, OR (c) panel Granger causality from balance-sheet to CPI rejects null at p<0.01 with positive coefficient at h=12-36 months after controlling for output gap and oil prices.

formal test & threshold
test:      cb_balance_sheet_cpi_decoupling_cross_institution_panel
threshold: max(core_cpi_divergence_6m, USA/JPN/EUR/GBR, 2008-2020) <= 2 pp AND inflation_expectations_5y5y in pre-2008 anchored range AND granger_p > 0.01

Method

Template
panel_fe
Fixed effects
country, year
Clustering
country
Sample
8 countries · 2008 – 2020
Evidence type
associational

Country-month panel of core-CPI divergence on central-bank-balance-sheet growth, with country and year fixed effects, country-clustered SEs. Primary gate: max divergence ≤ 2pp across the four jurisdictions. Secondary: panel Granger causality with output-gap and oil-price controls. Robustness: replace core-CPI with headline CPI; replace pre-2008 trend baseline with 2007-only baseline.

Data

VariableSourceTransform
core_cpi_inflation_yoy
outcome
fred:CPILFESL (USA)tier 1
boj:core_cpi (JPN)tier 1
ons:cpi_core (GBR)tier 1
pct_change_yoy
core_cpi_divergence_from_pre2008_trend
outcome
constructed:actual core-CPI YoY minus rolling pre-2008 5y trendtier 5
pp_difference
inflation_expectations_5y5y_forward
outcome
fred:T5YIFR (USA)tier 1
boe:gilt_implied_inflation_5y5y (GBR)tier 1
boj:5y5y_inflation_swap (JPN)tier 1
level_pct
m2_broad_money_growth
outcome
fred:M2SL (USA)tier 1
ecb:BSI.M.U2.M2 (EUR)tier 1
boj:money_stock_m2tier 1
boe:LPMVQJW (GBR)tier 1
pct_yoy
central_bank_balance_sheet_pct_gdp
treatment
fred:WALCLtier 1
fred:GDP (USA)tier 1
boj:monetary_basetier 1
fred:JPNNGDP (JPN)tier 1
boe:GDP (GBR)tier 1
ratio_to_nominal_gdp
monetary_base_growth
treatment
fred:BOGMBASE (USA)tier 1
boj:monetary_basetier 1
ecb:base_moneytier 1
boe:monetary_basetier 1
pct_yoy
short_rate
control
fred:DFF (USA)tier 1
ecb:FM (EUR)tier 1
boj:policy_rate (JPN)tier 1
boe:IUDBEDR (GBR)tier 1
level
output_gap
control
oecd:OutputGaptier 2
level
unemployment_rate
control
fred:UNRATEtier 1
ilostat:unemployment_ratetier 2
pct_labour_force
oil_price
control
imf_pcps:POILBREtier 1
log_diff

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — central_bank_balance_sheet_cpi_decoupling_panel_2008_2020

Verdict: INCONCLUSIVE_DATA_PENDING — insufficient observations after listwise deletion (13)

Pre-registration

  • Claim: Across the Federal Reserve, Bank of Japan, ECB, and Bank of England, the cumulative central-bank-balance-sheet expansion 2008-2020 exceeded 30% of GDP at each institution while cumulative core-CPI divergence from each institution's pre-2008 trend remained within ±2 percentage points and inflation-expectations 5y5y forwards remained within their pre-2008 anchored ranges. The cross-institution panel decoupling of base-money expansion from CPI inflation refutes the strong quantity-theoretic transmission prediction at advanced currency-issuers and is consistent with the PK endogenous-money / reserves-vs-broad-money distinction that animates heterodox monetary theory.
  • Falsification rule: The hypothesis is falsified if any of the following hold over 2008-2020 across the four institutions: (a) cumulative core-CPI divergence from each institution's pre-2008 5y trend exceeds 2 percentage points in any 6-month window in any of the four economies, (b) inflation-expectations 5y5y forward exits the pre-2008 anchored range (defined as ±0.75 pp around the pre-2008 mean) in any of the four jurisdictions, OR (c) panel Granger causality from balance-sheet to CPI rejects null at p<0.01 with positive coefficient at h=12-36 months after controlling for output gap and oil prices.
  • Falsification test: cb_balance_sheet_cpi_decoupling_cross_institution_panel

Estimate

  • Error: insufficient observations after listwise deletion (13)

Variables resolved

  • fred:CPILFESL (USA); boj:core_cpi (JPN); ons:cpi_core (GBR) → core_cpi_inflation_yoy (outcome, publisher=fred, n=70)
  • fred:T5YIFR (USA); boe:gilt_implied_inflation_5y5y (GBR); boj:5y5y_inflation_swap (JPN) → inflation_expectations_5y5y_forward (outcome, publisher=fred, n=24)
  • fred:M2SL (USA); ecb:BSI.M.U2.M2 (EUR); boj:money_stock_m2; boe:LPMVQJW (GBR) → m2_broad_money_growth (outcome, publisher=fred+boj, n=69)
  • fred:WALCL; fred:GDP (USA); boj:monetary_base; fred:JPNNGDP (JPN); boe:GDP (GBR) → central_bank_balance_sheet_pct_gdp (treatment, publisher=fred+boj, n=113)
  • fred:BOGMBASE (USA); boj:monetary_base; ecb:base_money; boe:monetary_base → monetary_base_growth (treatment, publisher=fred+boj, n=69)
  • fred:DFF (USA); ecb:FM (EUR); boj:policy_rate (JPN); boe:IUDBEDR (GBR) → short_rate (controls, publisher=fred+ecb+boj+boe, n=159)
  • oecd:OutputGap → output_gap (controls, publisher=oecd, n=3331)
  • fred:UNRATE; ilostat:unemployment_rate → unemployment_rate (controls, publisher=fred, n=632)
  • imf_pcps:POILBRE → oil_price (controls, publisher=imf_pcps, n=296)

Variables missing data

  • constructed: actual core-CPI YoY minus rolling pre-2008 5y trend (outcome, name=core_cpi_divergence_from_pre2008_trend) — vintage not on disk

Generated by scripts/run_panel_fe.py at 2026-06-29T17:54:13+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Companion to qe_base_money_cpi_transmission_failure (which is USA-only and stub-status) and to qe_asset_inflation_vs_cpi_divergence_post_2008. This hypothesis is the cross-institution panel test specifically: do all four major advanced-economy central banks show the same decoupling pattern, or is the USA result idiosyncratic? The pre-2020 cutoff isolates the QE-only window from the COVID fiscal-monetary coordination episode and the 2022 supply-shock episode.

Authored framework. Read the transparency note.