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Detrending and the Money-Output Link: International Evidence

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  • R. W. Hafer

    ()
    (Department of Economics and Finance, Southern Illinois University)

  • Ali M. Kutan

    ()
    (Department of Economics and Finance, Southern Illinois University)

Abstract

An important policy question is whether nominal money is relatively more useful than interest rates in explaining movements in real output. Previous analyses usually rely only on U.S. data or other financially developed countries from a specific region, such as the EU. This study examines the empirical relation between money, interest rates, and output across a sample of 20 countries, including industrial countries from different regions as well as economically and financially less-developed countries. On the basis of estimating an unconstrained, four-variable VAR model, the weight of evidence indicates that rejecting money as a potentially informative tool in setting monetary policy is unwarranted.

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Bibliographic Info

Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 69 (2002)
Issue (Month): 1 (July)
Pages: 159-174

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Handle: RePEc:sej:ancoec:v:69:1:y:2002:p:159-174

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Web page: http://www.southerneconomic.org/
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References

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Cited by:
  1. Asongu, Simplice A, 2012. "Correcting inflation with financial dynamic fundamentals: which adjustments matter in Africa?," MPRA Paper 46424, University Library of Munich, Germany, revised 14 Apr 2013.
  2. Josef C. Brada & Ali M. Kutan, 1999. "The end of moderate inflation in three transition economies?," Working Papers 1999-003, Federal Reserve Bank of St. Louis.
  3. Asongu, Simplice A, 2013. "Does Money Matter in Africa? New Empirics on Long- and Short-run Effects of Monetary Policy on Output and Prices," MPRA Paper 48494, University Library of Munich, Germany.
  4. Asongu Simplice, 2013. "How would monetary policy matter in the proposed African monetary unions? Evidence from output and prices," Working Papers 13/013, African Governance and Development Institute..
  5. Asongu Simplice, 2013. "New Empirics of monetary policy dynamics: evidence from the CFA franc zones," Working Papers 13/016, African Governance and Development Institute..
  6. Joe Haslag & R.W. Hafer & Garett Jones, 2003. "The Effect of Monetary Policy on Economic Output," Working Papers 0311, Department of Economics, University of Missouri.

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