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Testing Transmission Mechanisms on Economic Growth in Malaysia

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  • Wai Ching Poon

Abstract

This paper examines various transmission mechanism channels on economic growth in Malaysia over the quarterly period 1980:1-2004:4 using bounds testing approach. The bounds test reveals evidence of cointegration between the real GDP and the real exchange rate and share prices that address the exchange rate and asset price channels as the key transmission mechanisms in the conduct of the monetary policy stance. Nevertheless, the saving interest rate and credit channels are of insignificant.

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File URL: http://www.buseco.monash.edu.au/eco/research/papers/2010/2610transmissionpoon.pdf
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Bibliographic Info

Paper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 26-10.

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Length: 12 pages
Date of creation: May 2010
Date of revision:
Handle: RePEc:mos:moswps:2010-26

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Postal: Department of Economics, Monash University, Victoria 3800, Australia
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Keywords: cointegration; transmission mechanism channels; monetary policy stance; bounds test; Malaysia;

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  1. Lise Pichette, 2004. "Are Wealth Effects Important for Canada," Bank of Canada Review, Bank of Canada, vol. 2004(Spring), pages 29-35.
  2. Bernanke, Ben S & Blinder, Alan S, 1988. "Credit, Money, and Aggregate Demand," American Economic Review, American Economic Association, vol. 78(2), pages 435-39, May.
  3. Arturo Estrella & Frederic S. Mishkin, 1996. "Predicting U.S. recessions: financial variables as leading indicators," Research Paper 9609, Federal Reserve Bank of New York.
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  8. Roger Perman, 1991. "Cointegration: An Introduction to the Literature," Journal of Economic Studies, Emerald Group Publishing, vol. 18(3), pages 3-30, September.
  9. Bardsen, Gunnar, 1989. "Estimation of Long Run Coefficients in Error Correction Models," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 51(3), pages 345-50, August.
  10. Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 27-48, Fall.
  11. P. Burger & T. Knedlik, 2004. "The Mci As A Monetary Policy Guide In A Small, Open Emerging Market Economy," South African Journal of Economics, Economic Society of South Africa, vol. 72(2), pages 365-383, 06.
  12. Alfred Guender, 2005. "On Optimal Monetary Policy Rules and the Construction of MCIs in the Open Economy," Open Economies Review, Springer, vol. 16(2), pages 189-207, April.
  13. Cheng Hsiao, 1997. "Cointegration and Dynamic Simultaneous Equations Model," Econometrica, Econometric Society, vol. 65(3), pages 647-670, May.
  14. Frederic S. Mishkin, 1995. "Symposium on the Monetary Transmission Mechanism," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 3-10, Fall.
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