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The Long-Run Superneutrality of Money Revised: the Extended European Evidence

Deev Oleg () and Martin Hodula
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Deev Oleg: Masaryk University, Faculty of Economics and Administration, Department of Finance, Lipová 41a, 602 00 Brno, Czechia

Review of Economic Perspectives, 2016, vol. 16, issue 3, pages 187-203

Abstract: This article investigates the validity of the money superneutrality concept for the large panel of European economies. While focusing exclusively on endogenous growth theories including the Mundell-Tobin effect, we examine the long-run response of real output to a permanent inflation shock in every studied country using a structural vector autoregressive framework. For the majority of countries in our sample, the longrun superneutrality concept is confirmed since the original increase/decrease in output growth fades in time. We also test the additional hypothesis of whether the group of countries with smaller in-sample inflation mean forms the exception to the long-run money superneutrality. As the result, modern economies might be better described from the viewpoint of Sidrauski.

Keywords: endogenous growth theories; superneutrality; SVAR (search for similar items in EconPapers)
Date: 2016
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