Causality link between money, output and prices in malaysia: An empirical re-examination

• Abdul Majid Muhd Zulkhibri ^[1]
  1. [1] , Central Bank of Malaysia
• Localización: Applied econometrics and international development, ISSN 1578-4487, Vol. 7, Nº. 1, 2007, págs. 211-220
• Idioma: inglés
• Enlaces
  • Texto completo (pdf)
• Resumen

  • 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