Money and inflation in Malaysia: an analysis of causality (1970-92)

• Main Authors: Abdullah, Ahmad Zainuddin, Yusof, Zulkornain
• Format: Conference or Workshop Item
• Language: English
• Published: Universiti Putra Malaysia 1994
• Online Access: http://psasir.upm.edu.my/id/eprint/47454/1/Money%20and%20inflation%20in%20Malaysia%20an%20analysis%20of%20causality%20%281970-92%29.pdf; http://psasir.upm.edu.my/id/eprint/47454/
• Institution: Universiti Putra Malaysia

This paper investigates the causal relationship between money supply and rate of inflation using Malaysian data for the period 1970-92. The Granger methodology was adopted and results generally indicate a bidirectional relationship between money supply and the rate of inflation. In specific, money supply causes inflation for all cases (MI, M2 and the various choices of lag-lengths of the independent variable) while inflation causes money supply for all cases except for M₂ at lag 12 and M1 at lag 8 for the equal lag-length analysis.