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Is monetary policy really neutral in the long-run? Evidence for some emerging and developed economies

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  • Reginaldo Pinto Nogueira

    (Fundação João Pinheiro, Brazil)

Abstract

The traditional economic theory suggests that changes in the money supply or in the interest rates can influence the business cycle, but not the long-run potential output. In other words, monetary policy is neutral over the long-run. In this paper we use some new developments in econometrics to test for the existence of a long-run relationship between the monetary policy instrument used by most Central Banks - short-term interest rates - and real output. Using annual data for 14 emerging and developed countries our results offer overall support for the traditional economic theory.

Suggested Citation

  • Reginaldo Pinto Nogueira, 2009. "Is monetary policy really neutral in the long-run? Evidence for some emerging and developed economies," Economics Bulletin, AccessEcon, vol. 29(3), pages 2432-2437.
    • Handle: RePEc:ebl:ecbull:eb-09-00358
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    Cited by:

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    6. Asongu Simplice, 2013. "Does Money Matter in Africa? New Empirics on Long- and Short-run Effects of Monetary Policy on Output and Prices," Working Papers of the African Governance and Development Institute. 13/005, African Governance and Development Institute..
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    More about this item

    Keywords

    Money neutrality; monetary policy; cointegration tests.;
    All these keywords.

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates

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