Munich Personal RePEc Archive

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

Tang, Maggie May-Jean and Puah, Chin-Hong and Awang Marikan, Dayang-Affizzah (2013): Empirical Evidence on the Long-Run Neutrality Hypothesis Using Divisia Money. Forthcoming in: Journal of Academy of Business and Economics (2013)

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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.

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