Money, income, and causality in Pacific-Basin countries
Date of Original Version
The causal relationship between money and income for four Pacific-Basin countries, Japan, Taiwan, South Korea, and Thailand are investigated. The unit root tests are performed first to obtain the appropriate level of integer difference for money and income. The results reveal that the model's specifications for these countries are somewhat different from the U.S. experience. Tests od causal relations are then performed. The empirical evidence suggests that there is a causal relation running from money to income for Japan and Taiwan. For South Korea, there is a causal relation from money to income during the period from 1970 to 1988. For Thailand, however, there is no significant causal relation in either direction. The reason for the different results obtained in this study may be due to the institutional context of these countries such as the ability to control inflation, the extent of interest rate and exchange rate flexibility, the maturity of the financial structure, and the availability of marketable instruments. © 1993.
Publication Title, e.g., Journal
International Review of Economics and Finance
Chen, Shaw K., and Gene C. Lai. "Money, income, and causality in Pacific-Basin countries." International Review of Economics and Finance 2, 1 (1993): 87-98. doi: 10.1016/1059-0560(93)90033-M.