Advanced Search
MyIDEAS: Login to save this paper or follow this series

The Quantity Theory of Money and Its Long Run Implications: Empirical Evidence from Nigeria

Contents:

Author Info

  • Alimi, R. Santos

Abstract

The Quantity Theory of Money (QTM) is one of the popular classical macroeconomic models that explain the relationship between the quantity of money in an economy and the level of prices of goods and services. This study investigates this relationship for Nigeria economy over the period of 1960 to 2009. To check the stationarity properties, we employed Augmented Dickey Fuller (ADF) and Phillips-Perron (PP) test and found all the concerned variables are stationary only in the first differenced form. Using Johansen cointegration method, the empirical findings indicate that there exists long run cointegrating relationship among the concerned variables. Then applying the Granger causality test, we found a unidirectional causal relationship running from money supply to inflation which provides evidence in support for monetarist‟s view. In addition, this study does not provide evidence in supporting the well known fisher effect for Nigeria. Causality does not strictly run from inflation to interest rates as suggested by the Fisher hypothesis, instead a reversed causality between the variables is found. We finally used Wald test to verify the restrictions imposed on money aggregates and output, and we concluded and confirmed the proposition of quantity theory of money that inflation is a monetary phenomenon.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://mpra.ub.uni-muenchen.de/49598/
File Function: original version
Download Restriction: no

Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 49598.

as in new window
Length:
Date of creation: Jun 2012
Date of revision:
Handle: RePEc:pra:mprapa:49598

Contact details of provider:
Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC

Related research

Keywords: Quantity Theory of Money; Co-integration; Nigerian Economy.;

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
  2. repec:ebl:ecbull:v:3:y:2002:i:4:p:1-8 is not listed on IDEAS
  3. Godwin Nwaobi, 2001. "A Vector Error Correction And Nonnested Modelling Of Money Demand Function In Nigeria," Econometrics 0111004, EconWPA.
  4. Costas Karfakis, 2002. "Testing the quantity theory of money in Greece," Applied Economics, Taylor & Francis Journals, vol. 34(5), pages 583-587.
  5. Jamie Emerson, 2006. "The Quantity Theory of Money: Evidence from the United States," Economics Bulletin, AccessEcon, vol. 5(2), pages 1-6.
  6. Duck, Nigel W, 1993. "Some International Evidence on the Quantity Theory of Money," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(1), pages 1-12, February.
  7. Granger, Clive W J, 1986. "Developments in the Study of Cointegrated Economic Variables," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 48(3), pages 213-28, August.
  8. repec:ebl:ecbull:v:5:y:2006:i:2:p:1-6 is not listed on IDEAS
  9. Marvin Goodfriend, 1997. "A framework for the analysis of moderate inflations," Working Paper 97-04, Federal Reserve Bank of Richmond.
  10. Özgür Aslan & Levent Korap, 2007. "Testing Quantity Theory of Money for the Turkish Economy," Journal of BRSA Banking and Financial Markets, Banking Regulation and Supervision Agency, vol. 1(2), pages 93-109.
  11. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
  12. Moosa, Imad A., 1997. "Testing the long-run neutrality of money in a developing economy: the case of India," Journal of Development Economics, Elsevier, vol. 53(1), pages 139-155, June.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:49598. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.