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Empirical Evidence on the Long-Run Neutrality Hypothesis Using Divisia Money

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  • Tang, Maggie May-Jean
  • Puah, Chin-Hong
  • Awang Marikan, Dayang-Affizzah

Abstract

By employing Fisher and Seater’s (1993) long-run neutrality test, the researchers tested the monetary neutrality proposition in Singapore for the period of 1980-2009. Empirical findings show that monetary neutrality does not hold in Singapore when both the simple-sum money and Divisia money are employed. As both the simple-sum and Divisia monetary aggregates are non-neutral, monetary authorities may consider their use as a monetary policy tool affecting real economic activity.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 50020.

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Date of creation: 2013
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Handle: RePEc:pra:mprapa:50020

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Keywords: Monetary Neutrality; Divisia Money; ARIMA Model;

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