Money-output granger non causality in a small open economy : Malaysian experience

The monetary expansion policy together with policy responses to development by the authorities to a much greater extent during the period of study (1976-1996) have resulted the causality running from money to output. Since we find that Ml has strongly influenced output, it is suggests that the au...

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Main Author:	Abdul Rahman, Kamaludin
Format:	Thesis
Language:	English
Published:	2000
Subjects:	Monetary policy - Malaysia Malaysia - Economic conditions
Online Access:	http://psasir.upm.edu.my/id/eprint/85018/1/FEP%202000%2011%20IR.pdf
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id	my-upm-ir.85018
record_format	uketd_dc
spelling	my-upm-ir.850182021-04-07T03:07:55Z Money-output granger non causality in a small open economy : Malaysian experience 2000-10 Abdul Rahman, Kamaludin The monetary expansion policy together with policy responses to development by the authorities to a much greater extent during the period of study (1976-1996) have resulted the causality running from money to output. Since we find that Ml has strongly influenced output, it is suggests that the authorities may use Ml as intermediate target for output growth without giving much pressure on price in the long-run. We also find that Ml is suitable intermediate target for maintaining price stability to curb inflation in the long-run. Strong Ml causal linkages on output is consistent with the huge amount of non performing loans and large inflows of FDI in Malaysia which both finally created excessive demand for money in the period of study. In the case of M2, it does not have any causal linkages with output as this findings support the monetary neutrality theory where M2 is found to be neutral in the long-run. From this study we conclude that monetary targeting is still a relevant policy amid the fast changing world, however, there must be in harmony with other policy (e.g. trade, fiscal and exchange rate policy) to achieve sustainable economic growth with price stability and external equilibrium. Monetary policy - Malaysia Malaysia - Economic conditions 2000-10 Thesis http://psasir.upm.edu.my/id/eprint/85018/ http://psasir.upm.edu.my/id/eprint/85018/1/FEP%202000%2011%20IR.pdf text en public masters Universiti Putra Malaysia Monetary policy - Malaysia Malaysia - Economic conditions Baharumshah, Professor Ahmad Zubaidi
institution	Universiti Putra Malaysia
collection	PSAS Institutional Repository
language	English
advisor	Baharumshah, Professor Ahmad Zubaidi
topic	Monetary policy - Malaysia Malaysia - Economic conditions
spellingShingle	Monetary policy - Malaysia Malaysia - Economic conditions Abdul Rahman, Kamaludin Money-output granger non causality in a small open economy : Malaysian experience
description	The monetary expansion policy together with policy responses to development by the authorities to a much greater extent during the period of study (1976-1996) have resulted the causality running from money to output. Since we find that Ml has strongly influenced output, it is suggests that the authorities may use Ml as intermediate target for output growth without giving much pressure on price in the long-run. We also find that Ml is suitable intermediate target for maintaining price stability to curb inflation in the long-run. Strong Ml causal linkages on output is consistent with the huge amount of non performing loans and large inflows of FDI in Malaysia which both finally created excessive demand for money in the period of study. In the case of M2, it does not have any causal linkages with output as this findings support the monetary neutrality theory where M2 is found to be neutral in the long-run. From this study we conclude that monetary targeting is still a relevant policy amid the fast changing world, however, there must be in harmony with other policy (e.g. trade, fiscal and exchange rate policy) to achieve sustainable economic growth with price stability and external equilibrium.
format	Thesis
qualification_level	Master's degree
author	Abdul Rahman, Kamaludin
author_facet	Abdul Rahman, Kamaludin
author_sort	Abdul Rahman, Kamaludin
title	Money-output granger non causality in a small open economy : Malaysian experience
title_short	Money-output granger non causality in a small open economy : Malaysian experience
title_full	Money-output granger non causality in a small open economy : Malaysian experience
title_fullStr	Money-output granger non causality in a small open economy : Malaysian experience
title_full_unstemmed	Money-output granger non causality in a small open economy : Malaysian experience
title_sort	money-output granger non causality in a small open economy : malaysian experience
granting_institution	Universiti Putra Malaysia
publishDate	2000
url	http://psasir.upm.edu.my/id/eprint/85018/1/FEP%202000%2011%20IR.pdf
_version_	1747813512786214912

Money-output granger non causality in a small open economy : Malaysian experience

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