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A Review of the Literature on Monetary Neutrality

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  • Tang, Maggie May-Jean

Abstract

Long-run monetary neutrality (LRMN) is an idea expressed from the quantity theory of money, which posits that a permanent change in money stock has no real effect in the long-run. The LRMN theory is an empirical matter with regard to monetary policy, where it helps to define the monetary transmission and is able to identify the effectiveness of monetary policy by investigating the role of money in the long run. As a result, the study of LRMN has attracted great interest for a long period of time.

Suggested Citation

  • Tang, Maggie May-Jean, 2016. "A Review of the Literature on Monetary Neutrality," MPRA Paper 70113, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:70113
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    File URL: https://mpra.ub.uni-muenchen.de/70113/1/MPRA_paper_70113.pdf
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    References listed on IDEAS

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    1. Puah, Chin-Hong & Habibullah, M.S. & Abu Mansor, Shazali, 2008. "On the Long-Run Monetary Neutrality: Evidence from the SEACEN Countries," MPRA Paper 31762, University Library of Munich, Germany.
    2. Chin-Hong PUAH,* & Muzafar Shah HABIBULLAH** & Shazali Abu MANSOR*, 2002. "Some Empirical Evidence On The Quantity Theoretic Proposition Of Money In Asean-5," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 18, pages 31-47.
    3. Fama, Eugene F & Schwert, G William, 1979. "Inflation, Interest, and Relative Prices," The Journal of Business, University of Chicago Press, vol. 52(2), pages 183-209, April.
    4. Tang, Maggie May-Jean & Puah, Chin-Hong & Awang Marikan, Dayang-Affizzah, 2013. "Empirical Evidence on the Long-Run Neutrality Hypothesis Using Divisia Money," MPRA Paper 50020, University Library of Munich, Germany.
    5. Zivot, Eric & Andrews, Donald W K, 2002. "Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 25-44, January.
    6. Noriega, Antonio E., 2004. "Long-run monetary neutrality and the unit-root hypothesis: further international evidence," The North American Journal of Economics and Finance, Elsevier, vol. 15(2), pages 179-197, August.
    7. Puah, Chin-Hong & Habibullah, Muzafar Shah & Lau, Evan & Abu Mansor, Shazali, 2006. "Testing long-run monetary neutrality in Malaysia: Revisiting divisia money," MPRA Paper 31750, University Library of Munich, Germany.
    8. Kenneth Leong & Michael McAleer, 2000. "Testing long-run neutrality using intra-year data," Applied Economics, Taylor & Francis Journals, vol. 32(1), pages 25-37.
    9. Venus Khim-Sen Liew & Ahmad Zubaidi Baharumshah & Chin-Hong Puah, 2009. "Monetary Model of Exchange Rate for Thailand: Long-run Relationship and Monetary Restrictions," Global Economic Review, Taylor & Francis Journals, vol. 38(4), pages 385-395.
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    11. Choi-Meng Leong & Chin-Hong Puah & Shazali Abu Mansor & Evan Lau, 2010. "Testing the Effectiveness of Monetary Policy in Malaysia Using Alternative Monetary Aggregation," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 4(3), pages 321-338, August.
    12. Chin-Hong, Puah & Lee-Chea, Hiew, 2010. "Financial Liberalization, Weighted Monetary Aggregates and Money Demand in Indonesia," MPRA Paper 31731, University Library of Munich, Germany.
    13. Bae, Sang-Kun & Ratti, Ronald A., 2000. "Long-run neutrality, high inflation, and bank insolvencies in Argentina and Brazil," Journal of Monetary Economics, Elsevier, vol. 46(3), pages 581-604, December.
    14. Dimitrios Malliaropulos, 1995. "Testing long-run neutrality of money: evidence from the UK," Applied Economics Letters, Taylor & Francis Journals, vol. 2(10), pages 347-350.
    15. Frederick Wallace, 1999. "Long-run neutrality of money in the Mexican economy," Applied Economics Letters, Taylor & Francis Journals, vol. 6(10), pages 637-639.
    16. Puah, Chin-Hong & Jayaraman, T. K., 2007. "Dynamic linkage between Macroeconomic Activities and Stock Prices in Fiji," MPRA Paper 37671, University Library of Munich, Germany.
    17. Fisher, Mark E & Seater, John J, 1993. "Long-Run Neutrality and Superneutrality in an ARIMA Framework," American Economic Review, American Economic Association, vol. 83(3), pages 402-415, June.
    18. Wallace, Frederick H., 2005. "Long Run Money Neutrality: The Case of Guatemala," Revista Latinoamericana de Desarrollo Economico, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana, issue 5, pages 127-138, Octubre.
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    20. Tan Hui Boon & Baharumshah Ahmad Zubaidi, 1999. "Dynamic Causal Chain of Money, Output, Interest Rate and Prices in Malaysia: Evidence Based On Vector Error- Correction Modelling Analysis," International Economic Journal, Taylor & Francis Journals, vol. 13(1), pages 103-120.
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    More about this item

    Keywords

    Long-run monetary neutrality; literature review;

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates

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