Money, Income, Prices, and Causality in Pakistan. A Trivariate Analysis

Fazal Husain and Kalbe Abbas
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Fazal Husain: Pakistan Institute of Development Economics (PIDE) Islamabad.

No 2000:178, PIDE-Working Papers from Pakistan Institute of Development Economics

Abstract: This paper re-examines the causal relationship between money and income and between money and prices in Pakistan using a longer annual data set from 1949–50 to 1998–99 and employing Granger causality and Error Correction Models. We also investigate the causal relationships through trivariate approach. The analyses indicate the long run relationship among money, income, and prices. The analyses further suggest a one way causation from income to money implying that probably real factors rather than money supply has played a major role in increasing Pakistan’s national income. Regarding the causal relationship between money and prices, the analyses suggest a both way causation between them. This implies that monetary expansion increases, and is also increased by, inflation in Pakistan.

Pages: 10 pages
Date: 2000
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Citations: View citations in EconPapers (7)

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Related works:
Working Paper: Money, Income, Prices, and Causality in Pakistan: A Trivariate Analysis (2018)
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