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Testing for Long Run Neutrality of Money in Mexico

  • Gary L. Shelley

    (East Tennessee State University)

  • Frederick H. Wallace

    (Universidad de Quintana Roo)

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.

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File URL: http://128.118.178.162/eps/mac/papers/0402/0402003.pdf
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Paper provided by EconWPA in its series Macroeconomics with number 0402003.

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Length: 36 pages
Date of creation: 02 Feb 2004
Date of revision:
Handle: RePEc:wpa:wuwpma:0402003
Note: Type of Document - pdf; prepared on Windows2000; pages: 36
Contact details of provider: Web page: http://128.118.178.162

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