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Detrending and the Money-Output Link: International Evidence

  • R. W. Hafer

    ()

    (Department of Economics and Finance, Southern Illinois University)

  • Ali M. Kutan

    ()

    (Department of Economics and Finance, Southern Illinois University)

An important policy question is whether nominal money is relatively more useful than interest rates in explaining movements in real output. Previous analyses usually rely only on U.S. data or other financially developed countries from a specific region, such as the EU. This study examines the empirical relation between money, interest rates, and output across a sample of 20 countries, including industrial countries from different regions as well as economically and financially less-developed countries. On the basis of estimating an unconstrained, four-variable VAR model, the weight of evidence indicates that rejecting money as a potentially informative tool in setting monetary policy is unwarranted.

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Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 69 (2002)
Issue (Month): 1 (July)
Pages: 159-174

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Handle: RePEc:sej:ancoec:v:69:1:y:2002:p:159-174
Contact details of provider: Web page: http://www.southerneconomic.org/

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