This conclusion about the long-run relationship between money and prices is implicit in the consensus model, provided the money demand equation is stable. The consensus structural model is also about structure or process. It explains how monetary stimulus raises inflation. The consensus model remains consistent with a relationship between money growth and inflation, but it appears to downgrade the role of money.
But does it shortchange the role of money? In a search for answers, I will focus on monetary policy in Japan and on the differing role of money in the conduct of monetary policy by the European Central Bank and the Federal Reserve. III. The monetization debate: Does the consensus model shortchange the role of money?