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

Author

Listed:
  • Fazal Hussain

    (Pakistan Institute of Development Economics)

  • Kalbe Abbas

    (Pakistan Institute of Development Economics)

Abstract

There has been a long debate in economics regarding the role of money in an economy particularly in the determination of income and prices. The Monetarists claim that money plays an active role and leads to changes in income and prices. In other words, changes in income and prices in an economy are mainly caused by the changes in money stocks. Hence, the direction of causation runs from money to income and prices without any feedback, i.e., unidirectional causation.

Suggested Citation

  • Fazal Hussain & Kalbe Abbas, 2000. "Money, Income, Prices and Causality in Pakistan: A Trivariate Analysis," PIDE Research Report 2000:2, Pakistan Institute of Development Economics.
    • Handle: RePEc:pid:rrepot:2000:2
    as

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    References listed on IDEAS

    as
    1. Schwert, G. William, 1987. "Effects of model specification on tests for unit roots in macroeconomic data," Journal of Monetary Economics, Elsevier, vol. 20(1), pages 73-103, July.
    2. Kalbe Abbas, 1991. "Causality Test between Money and Income: A Case Study of Selected Developing Asian Countries (1960-1988)," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 30(4), pages 919-929.
    3. Sims, Christopher A, 1972. "Money, Income, and Causality," American Economic Review, American Economic Association, vol. 62(4), pages 540-552, September.
    4. James R. Barth & James T. Bennett, 1974. "The Role of Money in the Canadian Economy: An Empirical Test," Canadian Journal of Economics, Canadian Economics Association, vol. 7(2), pages 306-311, May.
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