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Is the QTM Controversy Settled?


Author Info

  • N R Bhanumurthy

    (Institute of Economic Growth)

  • M Ramachandran

    (Madras School of Economics)

  • Purna Chandra Padhan

    (University of Hyderabad)


The present study tests the validity of the Quantity Theory of Money with the help of a new test procedure developed by Horvath & Watson (Econometric Theory, 1995) in a multiple cointegration framework. By using a fairly long quarterly data set of USA, Canada, Australia and Italy for the period 1975-I to 1998-II the study found that I(0) velocity is proved in all the sample countries, except Canada. Further, it found that all the sample countries have at least one unknown cointegrating vector between money supply, prices and real income, corroborating the propositions of QTM.

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Bibliographic Info

Paper provided by Institute for Social and Economic Change, Bangalore in its series Working Papers with number 81.

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Length: 16 pages
Date of creation: 2001
Date of revision:
Handle: RePEc:sch:wpaper:81

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Related research

Keywords: Quantity theory of money; Multiple Cointegration;

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