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Empirical relationships among money, output and consumer prices in nine Muslim-majority countries

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  • Hossain, Akhand Akhtar

Abstract

This paper highlights the role of price stability in the integrity and sustainability of Islamic banking and finance (IBF) while investigating the sources of inflation and its volatility in nine Muslim-majority countries which have introduced IBF since the late 1970s. The empirical results, obtained by the Engle–Granger, Johansen and autoregressive distributed lag (ARDL) bounds tests with data extending back as far as the 1950s, suggest the presence of those cointegral and causal relations among money, output and prices that are implied by classical monetary theory. Balanced-panel results obtained by analysis of the same data-set over the shorter period 1975–2010 reinforce the results obtained for the individual countries for the varying sample periods.

Suggested Citation

  • Hossain, Akhand Akhtar, 2014. "Empirical relationships among money, output and consumer prices in nine Muslim-majority countries," Journal of Asian Economics, Elsevier, vol. 31, pages 42-56.
    • Handle: RePEc:eee:asieco:v:31-32:y:2014:i::p:42-56
    DOI: 10.1016/j.asieco.2014.04.002
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    More about this item

    Keywords

    Islamic monetary policy; High and volatile inflation; Muslim-majority countries; Panel data;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

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