CAUSALITY LINK BETWEEN MONEY, OUTPUT AND PRICES IN MALAYSIA: AN EMPIRICAL RE-EXAMINATION
This paper re-examines the causality relationship between monetary aggregates, output and prices in the case of Malaysia. The study is based upon a vector autoregression (VAR) model applying the Granger no-causality procedure developed by Toda and Yamamoto (1995). The results indicate a two-way causality running between monetary aggregates, M2 and M3 and output which is consistent with theoretically conjecture by Keynesian and Monetarist views whereas there is a one-way causality running from monetary aggregate, M1 and output. In addition, the results suggest that all monetary aggregates have a strong one-way causality running from money to prices but no evidence for the opposite causality. Thus, the results add the empirical support to the argument in the literature that inflation is a monetary phenomenon.
Year of publication: |
2007
|
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Authors: | MUHD-ZULKHIBRI, Abdul Majid |
Published in: |
Applied Econometrics and International Development. - Euro-American Association of Economic Development. - Vol. 7.2007, 1
|
Publisher: |
Euro-American Association of Economic Development |
Subject: | money-output | causality | Toda-Yamamoto | prices |
Saved in:
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