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Testing quantity theory of money for the Turkish economy

  • Levent, Korap

In this paper, it is tried to test the main assumptions of the Quantity Theory of Money for the Turkish economy. Using some contemporaneous estimation techniques to examine the long-run stationary economic relationships on which the quantity theory is constructed, it is found that stationary characteristics of the velocitities of narrowly and broadly defined monetary aggregates cannot be rejected. However, monetary aggregates seem to be endogenous for the long-run evoluation of prices and real income. It is concluded that monetary authorities follow an accommodative monetary policy inside the period given the endogeneity of the monetary variables.

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File URL: http://mpra.ub.uni-muenchen.de/21704/1/MPRA_paper_21704.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 21704.

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Date of creation: 2007
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Publication status: Published in Journal of BRSA Banking and Financial Markets 2.1(2007): pp. 93-109
Handle: RePEc:pra:mprapa:21704
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Web page: http://mpra.ub.uni-muenchen.de

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  11. Osterwald-Lenum, Michael, 1992. "A Note with Quantiles of the Asymptotic Distribution of the Maximum Likelihood Cointegration Rank Test Statistics," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 461-72, August.
  12. Serletis, Apostolos & Krause, David, 1996. "Empirical evidence on the long-run neutrality hypothesis using low-frequency international data," Economics Letters, Elsevier, vol. 50(3), pages 323-327, March.
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  18. Gonzalo, Jesus, 1994. "Five alternative methods of estimating long-run equilibrium relationships," Journal of Econometrics, Elsevier, vol. 60(1-2), pages 203-233.
  19. James Bullard, 1999. "Testing long-run monetary neutrality propositions: lessons from the recent research," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 57-77.
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