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Causality Relationship between Money, Income, Price and Exchange Rates in a Small Open Economy: the Case of Hong Kong

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  • Tai-Yuen HON

    (Hong Kong Shue Yan University, China.)

Abstract

This paper investigates the direction of causation among income, price, exchange rates and money supply in Hong Kong. We use the Granger(1969, 1980) causality concept to find the existence of such a relationship. The paper presents the results of two separate bivariate analyses: on involving money and income, and the other involving money and exchange rates. A notable result to come out of the paper is that there is no causality relationship between them.

Suggested Citation

  • Tai-Yuen HON, 2015. "Causality Relationship between Money, Income, Price and Exchange Rates in a Small Open Economy: the Case of Hong Kong," Journal of Economics Library, KSP Journals, vol. 2(4), pages 350-363, December.
    • Handle: RePEc:ksp:journ5:v:2:y:2015:i:4:p:350-363
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    References listed on IDEAS

    as
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    5. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
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    More about this item

    Keywords

    Causality; Money; Income; Price; Exchange rates.;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General

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