 Money, Inflation and Output in Nigeria and South Africa: Could Friedman and Schwartz Be Right?Journal of African Business, 2019, vol. 20, issue 3, 392-406 Abstract: This study examines the non-linear relationship between money, inflation and output with respect to the Friedman and Schwartz hypotheses that monetary policy affects prices in the long-run but not in the short-run, and influences output in the short-run but not in the long-run. The study examines the case of Nigeria and South Africa for the period 1970–2016 using the ARDL approach. The study proved that Friedman and Schwartz were right that money growth influences output in the short-run and not in the long-run. This suggests monetary policy is neutral in the long-run; however, the findings of this study cast some doubts on their popular view that money growth affect prices in the long-run but not in the short-run. This study shows that money growth actually affects prices both in the short and long-run. Thus, it is only the long-run dimension of the second hypothesis that is valid; the short-run view of the hypothesis is invalid for both Nigeria and South Africa. In fact, the significant estimates of money growth on inflation in both countries prove that inflation is everywhere a monetary phenomenon (both in the short and long run). Date: 2019 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:wjabxx:v:20:y:2019:i:3:p:392-406 Ordering information: This journal article can be ordered from DOI: 10.1080/15228916.2019.1581012 Access Statistics for this article Journal of African Business is currently edited by Samuel Bonsu More articles in Journal of African Business from Taylor & Francis Journals |
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