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Money and uncertainty in the Philippines: A Friedmanite Perspective

Author

Listed:
  • Assad L. Baunto

    (UP System - University of the Philippines)

  • Christian Bordes

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Samuel Maveyraud

    (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)

  • Philippe Rous

    (LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges)

Abstract

This paper aims to provide a unified theoretical framework of the two hypotheses proposed by Friedman: (i). increased variability of money supply results in the decline of income velocity of money and (ii) high inflation leads high variability of inflation which reduces potential output growth. This paper also provides empirical investigation to validate Friedman's hypotheses using Philippine data. The Philippine economy experienced persistently higher and more variable inflation rate and weaker macroeconomic performance relative to other Asian countries, and these characteristics provide ample opportunity to evaluate Friedman's proposals at work. Utilizing original methodologies (e.g. band‐pass filter), our findings validate both proposals.

Suggested Citation

  • Assad L. Baunto & Christian Bordes & Samuel Maveyraud & Philippe Rous, 2007. "Money and uncertainty in the Philippines: A Friedmanite Perspective," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00308663, HAL.
    • Handle: RePEc:hal:cesptp:hal-00308663
    Note: View the original document on HAL open archive server: https://hal.science/hal-00308663
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    References listed on IDEAS

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    Cited by:

    1. Rizvi, Syed Kumail Abbas & Naqvi, Bushra, 2008. "Asymmetric Behavior of Inflation Uncertainty and Friedman-Ball Hypothesis: Evidence from Pakistan," MPRA Paper 19488, University Library of Munich, Germany.
    2. Syed Kumail Abbas Naqvi & Bushra Naqvi, 2010. "Asymmetric Behavior of Inflation Uncertainty and Friedman-Ball Hypothesis: Evidence from Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 15(2), pages 1-33, Jul-Dec.
    3. Rizvi, Syed Kumail Abbas & Naqvi, Bushra, 2009. "Inflation Volatility: An Asian Perspective," MPRA Paper 19489, University Library of Munich, Germany.

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