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Relationship among Money, Prices and Aggregate Output in Thailand

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  • Jiranyakul, Komain

Abstract

This paper investigates the relationship among monetary aggregates, prices, and aggregate output using Thailand’ quarterly data from 1993:Q1 to 2006:Q4. The estimates of money demand function based on the quantity theory indicate a stable long-run relationship between real money demand and aggregate output when M3 is used as monetary aggregate. The estimates of the prices and output equations show that cointegration of the general price level, money stock and aggregate output exists when M1 is used as monetary aggregate. Results suggest that only M3 can be used in the real money demand function while M1 is a key determinant of prices and output. The success of monetary policy should depend on M1 and M3, but not M2 if the target is to stimulate growth and to control inflation.

Suggested Citation

  • Jiranyakul, Komain, 2009. "Relationship among Money, Prices and Aggregate Output in Thailand," MPRA Paper 46963, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:46963
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    Cited by:

    1. P., Srinivasan & M., Kalaivani, 2013. "On the Temporal Causal Relationship between Macroeconomic Variables: Empirical Evidence from India," MPRA Paper 46803, University Library of Munich, Germany.
    2. Srinivasan Palamalai & Kalaivani Mariappan & Christopher Devakumar, 2014. "On the Temporal Causal Relationship Between Macroeconomic Variables," SAGE Open, , vol. 4(1), pages 21582440145, February.

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    More about this item

    Keywords

    Money; Price Level; Aggregate Output; Cointegration;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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