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Testing for Long Run Neutrality of Money in Mexico

Author

Listed:
  • Gary L. Shelley

    (East Tennessee State University)

  • Frederick H. Wallace

    (Universidad de Quintana Roo)

Abstract

The Fisher-Seater methodology is used to investigate long run money neutrality in Mexico from 1932-2001. Long run neutrality is rejected for the full sample period. However, evidence suggests that the rejection is the result of a severe, downward shift in the mean growth rate of real GDP occurring at 1982. Neutrality is not rejected if post-1981 real GDP is adjusted for the change in mean growth or if one uses data only through 1981. The downward shift in mean real GDP growth followed sharp upward movements in the money and inflation series. This finding of non- neutrality in Mexico arising from extreme conditions is similar to that of Boschen and Otrok (1994) for the US.

Suggested Citation

  • Gary L. Shelley & Frederick H. Wallace, 2004. "Testing for Long Run Neutrality of Money in Mexico," Macroeconomics 0402003, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpma:0402003
    Note: Type of Document - pdf; prepared on Windows2000; pages: 36
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/mac/papers/0402/0402003.pdf
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    References listed on IDEAS

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    Cited by:

    1. Gary L. Shelley & Frederick H. Wallace, 2004. "Long Run Effects of Money on Real Consumption and Investment in the U.S," Macroeconomics 0404007, University Library of Munich, Germany, revised 06 Apr 2004.
    2. Wallace, Fred & Cabrera-Castellanos, Luis F., 2006. "Neutralidad monetaria a Largo plazo: El caso de Guatemala [Long Run Money Neutrality in Guatemala]," MPRA Paper 4025, University Library of Munich, Germany, revised 2006.
    3. 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.

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    Keywords

    money; neutrality; Mexico;
    All these keywords.

    JEL classification:

    • E - Macroeconomics and Monetary Economics

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