An Assessment of the Usefulness of Money for Policy in the PhilippinesMaria Socorro Gochoco-Bautista
Asian Economic Papers, 2006, vol. 5, issue 1, pages 142-176 Abstract: This study assesses the usefulness of money for policy in the Philippines. The basic idea behind the use of monetary aggregates for policy is that observed fluctuations in money anticipate movements in the ultimate objective of monetary policy, such as inflation control. The paper examines the stability of key empirical relationships, including the behavior of velocity and the presence of cointegrating relationships among money and variables of interest to policymakers. In general, results indicate that the stability of velocity and the presence of cointegrating relationships lend some limited support to the potential usefulness of money for policy. The ability of money to predict inflation is examined using Granger causality tests and an unrestricted vector autoregression (VAR) that examines the relative contribution of innovations in money to the variance of the forecast errors in inflation. In general, money's ability to predict inflation is less clear-cut and seems to be dependent on the ordering and lag lengths of the variables used in the VAR and the definition of money used. (c) 2006 The Earth Institute at Columbia University and the Massachusetts Institute of Technology. Downloads: (external link) Related works: Ordering information: This journal article can be ordered from Access Statistics for this article Asian Economic Papers is edited by Jeffrey D. Sachs, Yunjong Wang and Wing Thye Woo More articles in Asian Economic Papers from MIT Press |
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