A direct test of the endogeneity of money: Implications for Gulf Cooperation Council (GCC) countries

Bedri Tas and Selahattin Togay

Economic Modelling, 2012, vol. 29, issue 3, 577-585

Abstract: This paper contributes to the ongoing discussion about the endogeneity of money supply by empirically investigating the GCC countries. We propose and implement a direct test of money supply endogeneity that depends on econometric specification of exogeneity which has not been used in the literature before. To be able to make comparisons with previous studies, we also conducted Granger Causality tests to analyze the causality relationship between bank credit and money supply. Both of the empirical studies provide empirical evidence for the endogeneity of money supply in GCC countries. The results of the paper have many significant monetary policy implications for the upcoming monetary unification of the GCC countries.

Keywords: GCC Countries; Endogenous money supply; Monetary union; Post Keynesian monetary theory (search for similar items in EconPapers)
JEL-codes: C22 C26 E41 E51 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:29:y:2012:i:3:p:577-585

DOI: 10.1016/j.econmod.2011.12.015

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