Empirical Evidence on the Long-Run Neutrality Hypothesis Using Divisia Money

Maggie Tang, Chin-Hong Puah and Dayang-Affizzah Awang Marikan

MPRA Paper from University Library of Munich, Germany

Abstract: By employing Fisher and Seater’s (1993) long-run neutrality test, the researchers tested the monetary neutrality proposition in Singapore for the period of 1980-2009. Empirical findings show that monetary neutrality does not hold in Singapore when both the simple-sum money and Divisia money are employed. As both the simple-sum and Divisia monetary aggregates are non-neutral, monetary authorities may consider their use as a monetary policy tool affecting real economic activity.

Keywords: Monetary Neutrality; Divisia Money; ARIMA Model (search for similar items in EconPapers)
JEL-codes: C12 C43 E50 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-mon and nep-sea
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Citations: View citations in EconPapers (4)

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