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Empirical Evidence on the Long-Run Neutrality Hypothesis Using Divisia Money

Author

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  • Tang, Maggie May-Jean
  • Puah, Chin-Hong
  • Awang Marikan, Dayang-Affizzah

Abstract

By employing Fisher and Seater’s (1993) long-run neutrality test, the researchers tested the monetary neutrality proposition in Singapore for the period of 1980-2009. Empirical findings show that monetary neutrality does not hold in Singapore when both the simple-sum money and Divisia money are employed. As both the simple-sum and Divisia monetary aggregates are non-neutral, monetary authorities may consider their use as a monetary policy tool affecting real economic activity.

Suggested Citation

  • Tang, Maggie May-Jean & Puah, Chin-Hong & Awang Marikan, Dayang-Affizzah, 2013. "Empirical Evidence on the Long-Run Neutrality Hypothesis Using Divisia Money," MPRA Paper 50020, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:50020
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    References listed on IDEAS

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    Cited by:

    1. Tang, Maggie May-Jean, 2016. "A Review of the Literature on Monetary Neutrality," MPRA Paper 70113, University Library of Munich, Germany.
    2. Kuek, Tai Hock, 2016. "A Review of Literature on Monetary Neutrality - The case of India," MPRA Paper 71962, University Library of Munich, Germany, revised 13 Jun 2016.
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    4. Wong, Soon-Ming & Loi, Siew-Ling, 2016. "Money Influence on Real Economy Activity: Evidences Review on Japanese Context," MPRA Paper 73559, University Library of Munich, Germany.

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    More about this item

    Keywords

    Monetary Neutrality; Divisia Money; ARIMA Model;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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