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Causality in the United Kingdom: Results from an Open Economy

Author

Listed:
  • Mark Wheeler

    (Western Michigan University)

Abstract

This study examines money-income causality in the United Kingdom. Unlike most previous studies, this study finds unidirectional causality running from U.K. M1 to U.K. income. Furthermore, U.S. M1 is found to cause U.K. M1 only weakly and does not cause U.K. income. These findings are inconsistent with the view that the United Kingdom functions as a small, open economy. The standard result is that movements in the money supply of the reserve currency country, the United States, leads to movements in the money supply and nominal income of other countries, while the domestic money supply has no impact on domestic income.

Suggested Citation

  • Mark Wheeler, 1991. "Causality in the United Kingdom: Results from an Open Economy," Eastern Economic Journal, Eastern Economic Association, vol. 17(4), pages 439-449, Oct-Dec.
    • Handle: RePEc:eej:eeconj:v:17:y:1991:i:4:p:439-449
    as

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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume17/V17N4P439_449.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    M1; Money Supply; Money; Open Economy; Supply;
    All these keywords.

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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