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

• Main Authors: Tang, Maggie May-Jean, Puah, Chin Hong, Dayang Affizzah, Awang Marikan
• Format: Article
• Language: English
• Published: International Academy of Business and Economics 2013
• Subjects: H Social Sciences (General)
• Online Access: http://ir.unimas.my/id/eprint/18016/1/EMPIRICAL%20EVIDENCE%20ON%20THE%20LONG-RUN%20NEUTRALITY%20%28abstract%29.pdf; http://ir.unimas.my/id/eprint/18016/; https://mpra.ub.uni-muenchen.de/50020/
• Institution: Universiti Malaysia Sarawak

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.