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Evidence of the Long-Run Neutrality of Money: The Case of South Korea and Taiwan

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  • Shyh-Wei Chen

    () (Department of Finance, Dayeh University)

Abstract

This paper investigates the long-run neutrality of money using quarterly data of South Korea and Taiwan and the methodology of King and Watson (1997) particular attention is given to the integration and cointegration properties of the variables. Empirical evidence provides considerable support for the long-run neutrality of money with respect to real output in the case of South Korea, indicating that it is consistent with two of the business cycle, i.e, the monetary intertemporal model and the monetary misperceptions theory. There is little evidence that the long-run monetary neutrality hypothesis holds in the case of Taiwan. Based on the estimated results, the hypothesis of the short-run neutrality of money is rejected for both countries.

Suggested Citation

  • Shyh-Wei Chen, 2007. "Evidence of the Long-Run Neutrality of Money: The Case of South Korea and Taiwan," Economics Bulletin, AccessEcon, vol. 3(64), pages 1-18.
  • Handle: RePEc:ebl:ecbull:eb-07c30067
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    References listed on IDEAS

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    Cited by:

    1. Fakhri Issaoui & Talel Boufateh & Mourad Guesmi, 2015. "Money Neutrality: Rethinking the Myth," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(3), pages 287-320, June.
    2. Wong, Soon-Ming & Loi, Siew-Ling, 2016. "Money Influence on Real Economy Activity: Evidences Review on Japanese Context," MPRA Paper 73559, University Library of Munich, Germany.
    3. Ahrens, Steffen & Snower, Dennis J., 2014. "Envy, guilt, and the Phillips curve," Journal of Economic Behavior & Organization, Elsevier, vol. 99(C), pages 69-84.
    4. Tang, Maggie May-Jean & Puah, Chin-Hong & Awang Marikan, Dayang-Affizzah, 2013. "Empirical Evidence on the Long-Run Neutrality Hypothesis Using Divisia Money," MPRA Paper 50020, University Library of Munich, Germany.
    5. Kuek, Tai Hock, 2016. "A Review of Literature on Monetary Neutrality - The case of India," MPRA Paper 71962, University Library of Munich, Germany, revised 13 Jun 2016.

    More about this item

    JEL classification:

    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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