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Title: |
The Causal Relation between Money and
Inflation in a Developing Economy |
| Author: |
Siddiqui, Anjum |
| Author
Affiliation: |
U Auckland |
| Source: |
International Economic Journal, Summer 1989, v. 3, no. 2, pp. 79-96 |
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Publication Date: |
Summer 1989 |
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Abstract: |
Is there unidirectional causality from
money to inflation? This question was examined by using Pakistan as a
case study for a developing country. In this paper money was found to be
endogenous in Pakistan, and both narrow and broad money indicate a
bi-directional relationship with inflation. The causal inferences were
examined using alternate causality tests, different prewhitening
filters, and different proxies for money and inflation; all of which
have direct bearing on the causal inferences. The estimated money
inflation feedbacks were interpreted to be "caused" by the link of money
and inflation with government budget deficits, balance of payments
adjustments and suppressed interest rates. |
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