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Bivariate and Multivariate Tests of Money-Price Causality: Robust Evidence from a Small Developing Country

  • Abul M. M. Masih

    (University of New South Wales, Canberra, Australia)

  • Rumi Masih

    (University of Cambridge, Cambridge, CB3 9DD, UK)

This paper is an attempt at re-examining the question of causality between money and prices both in the bivariate and multivariate context of a small developing economy, based on an improved methodology. Pakistan is used as a case study. The study tends to suggest rather strongly that in the case of Pakistan during the period under consideration (1970|71 to 1993|94), contrary to earlier findings, it was price that was the leading variable as the structuralist maintain and not the other way around as the monetarist maintain. © 1997 John Wiley & Sons, Ltd.

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Article provided by John Wiley & Sons, Ltd. in its journal Journal of International Development.

Volume (Year): 9 (1997)
Issue (Month): 6 ()
Pages: 803-825

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Handle: RePEc:wly:jintdv:v:9:y:1997:i:6:p:803-825
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  1. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
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