ECONOMIC LIBERALIZATION AND THE CAUSAL RELATIONS AMONG MONEY, INCOME, AND PRICES: The case of Pakistan

Fazal Husain and Abdul Rashid ()

Pakistan Journal of Applied Economics, 2002, vol. 18, 103-121

Abstract: This study re-examines the causal relations between money and the two variables, i.e., income and prices. Using annual data from 1959-60 to 2003-04, examining the stochastic properties or the variables used in the analysis, and taking care of the shifts in the series due to the start or the economic liberalization program in the early 1990s, we investigate the causal relations between real money and real income, nominal money and nominal income, and nominal money and prices. The analysis indicates. in general, the long run relationship between the money, income. and prices. The analysis further suggests a one way causation from income to money in the long run implying that real factors rather than money supply has played a major role in increasing Pakistan's national income. The study fails to find the active role of money in changing income even after taking care of possible shifts in these variables due to economic reforms. As regards the causal relationship between money and prices. the analysis suggests a uni-directional causality from money to prices, implying that monetary expansion increases inflation in Pakistan.

Date: 2002
References: Add references at CitEc
Citations:

Downloads: (external link)
http://aerc.edu.pk/wp-content/uploads/2017/02/Doc162-3.pdf (application/pdf)

Related works:
Working Paper: Economic Liberalization and the Causal Relations among Money, Income, and Prices: The Case of Pakistan (2006)
Working Paper: Economic Liberalization and the Causal Relations among Money, Income, and Prices: The Case of Pakistan (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pje:journl:article08iv

Access Statistics for this article

More articles in Pakistan Journal of Applied Economics from Applied Economics Research Centre Contact information at EDIRC.
Bibliographic data for series maintained by Samina Khalil ( this e-mail address is bad, please contact ).