Can Inflation be Claimed as a Monetary Phenomenon? The Malaysian Experience

Chor Foon Tang and Ilhan Ozturk

International Journal of Economics and Financial Issues, 2017, vol. 7, issue 3, 453-460

Abstract: The purpose of this study is to empirically re-investigate the money-prices nexus for Malaysia through the cointegration and causality techniques. This study covered the monthly data from 1971:M1-2014:M8. The Maki multiple breaks cointegration test suggests that the variables are cointegrated. Furthermore, the MWALD test shows a unidirectional causal relationship run from money supply (M2) to aggregate prices, meaning that only the monetarist's view exist in the Malaysian economy. However, the time-varying causality tests indicate that inflation is not always a monetary phenomenon in Malaysia. Therefore, the contractionary monetary policy may not an effective instrument in managing inflationary behaviour in Malaysia.

Keywords: Cointegration; Inflation; Money; Recursive Regression; Rolling Regression (search for similar items in EconPapers)
JEL-codes: C22 E31 E51 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eco:journ1:2017-03-59

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