Causality Link Between Money, Output And Prices In Malaysia: An Empirical Re-Examination
AbstractThis paper re-examines the causality relationship between monetary aggregates, output and prices in the case of Malaysia. The study is based upon a vector autoregression (VAR) model applying the Granger no-causality procedure developed by Toda and Yamamoto (1995). The results indicate a two-way causality running between monetary aggregates, M2 and M3 and output which is consistent with theoretically conjecture by Keynesian and Monetarist views whereas there is a one-way causality running from monetary aggregate, M1 and output. In addition, the results suggest that all monetary aggregates have a strong one-way causality running from money to prices but no evidence for the opposite causality. Thus, the results add the empirical support to the argument in the literature that inflation is a monetary phenomenon.
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Bibliographic InfoArticle provided by Euro-American Association of Economic Development in its journal Applied Econometrics and International Development.
Volume (Year): 7 (2007)
Issue (Month): 1 ()
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Web page: http://www.usc.es/economet/eaa.htm
Find related papers by JEL classification:
- E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
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- P., Srinivasan & M., Kalaivani, 2013. "On the Temporal Causal Relationship between Macroeconomic Variables: Empirical Evidence from India," MPRA Paper 46803, University Library of Munich, Germany.
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