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On the Long-run Relationship Between Money, Output and Interest Rates: A Cointegration Analysis for West Germany

Published online by Cambridge University Press:  17 August 2016

Werner Gaab
Affiliation:
Universität Essen
Olaf Liedtke
Affiliation:
Universität Essen & Georgetown University, Washington D.C.
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Summary

The existence of a long-run equilibrium relationship between real money balances, real output and an interest rate plays an important role in economic theory and monetary policy. The main purpose of this paper is to look for such a long-run relationship in Germany in face of a changing monetary policy regime in mid-1970s. We use a test for cointegration developed by Johansen (1988). The empirical evidence is very fragile depending heavily on the time period analyzed.

Keywords

Type
Part IV: Time Series Analysis of Output and Employment
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1992

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