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Using P-Star Model to Linking Money and Prices in A Financial Liberalised Developing Economy: The Case for Malaysia

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  • Habibullah, Muzafar

    (Department of Economics University PUlra Malaysia 43400 UPM Serdang Selangor Daro1 Ehsan Malaysia)

Abstract

The P-Star approach of modelling inflalion proposed by Hallman et al. has been widely tested in the United States and other developed countries. The applicability of the P-Star model for the developing countries is yet to be determined. The main purpose of the present study is to add to the current literature on the robustness of the P-Star model with respect to a developing country - Malaysia. Using a sample period from 1981: 1 t0 1994:4, our results suggest that Malaysian monetary data support the P-Star model. We conclude that there is a close relationship between money and the price level in Malaysia despite the occurences of financial liberalisation in the 1980s and 1990s.

Suggested Citation

  • Habibullah, Muzafar, 1999. "Using P-Star Model to Linking Money and Prices in A Financial Liberalised Developing Economy: The Case for Malaysia," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 33, pages 123-140.
    • Handle: RePEc:ukm:jlekon:v:33:y:1999:i::p:123-140
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