Money supply behaviour in emerging economies: a comparative analysis

Zatul Badarudin, Ahmed Khalid and Mohamed Ariff ()

Journal of the Asia Pacific Economy, 2009, vol. 14, issue 4, 331-350

Abstract: This paper reports new evidence consistent with the post-Keynesian hypothesis of money endogeneity for hitherto unexplored 10 emerging economies. These results were obtained using a vector error correction model to test for long-run and short-run causalities with data from 1996 to 2007. The evidence suggests that money supply is endogenous in five countries, namely China, the Czech Republic, India, Malaysia and Turkey; it is exogenous in Mexico, while there was no causality found in Indonesia, Russia and Taiwan. Thailand showed endogeneity in the long-run causality. Some suggestions are made to explain the mixed results, and we also discuss the limitations arising from our narrow specifications of the money supply and the models.

Date: 2009
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DOI: 10.1080/13547860903169324

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