Dynamic Causal Chain of Money, Output, Interest Rate and Prices in Malaysia: Evidence Based On Vector Error- Correction Modelling Analysis
Hui-Boon Tan and
Ahmad Zubaidi Baharumshah ()
International Economic Journal, 1999, vol. 13, issue 1, 103-120
The dynamic causal chain among money, real output, interest rate, and inflation is Reexamined in the context of a small fast-growing economy using the recently developed techniques of Johansen's multivariate conitegration analysis followed by vector error-correction modelling, Granger causality, variance decompositions, and impulse response functions. The results of the multivariate cointegration tests suggested a stable long-run equilibrium relationship exists among these macroeconomic variables. The short-run results based on vector error-correction modeling, on the other hand, support the New Keynesians' view that money is non- neutral, at least in the short-run. It also indicates that monetary policy can contribute to the stability of domestic prices. M1, among the various definitions of money stock, has been identified as the most effective intermediate monetary target to curb inflation. M3, in turn, has been suggested as the most appropriate intermediate target to promote sustainable economic growth with contained inflation. For this economy, the deviation of the macroeconomic activity from its long-run equilibrium is adjusted through changes in the money stock and prices [E44]
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11) Track citations by RSS feed
Downloads: (external link)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:taf:intecj:v:13:y:1999:i:1:p:103-120
Ordering information: This journal article can be ordered from
Access Statistics for this article
International Economic Journal is currently edited by Jaymin Lee Editor
More articles in International Economic Journal from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().