Open AccessThe search for co-integration between money, prices and income: Low frequency evidence from the Turkish economy
Author(s) -
Cem Saatçıoğlu,
Levent Korap
Publication year - 2009
Publication title -
panoeconomicus
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.289
H-Index - 14
eISSN - 2217-2386
pISSN - 1452-595X
DOI - 10.2298/pan0901055s
Subject(s) - economics , currency , circulation (fluid dynamics) , endogeneity , velocity of money , monetary economics , broad money , endogenous money , variable (mathematics) , hyperinflation , turkish , demand deposit , macroeconomics , economy , econometrics , monetary policy , mathematical analysis , linguistics , philosophy , physics , mathematics , thermodynamics
In this paper, we aim to test the empirical validity of the QTM relationship for the Turkish economy. Using some contemporaneous time series estimation techniques, our estimation results reveal that stationarity characteristics of the velocities of currency in circulation and the broad money aggregate in the economy cannot be rejected through a quantity theoretical co-integrating long-term variable space. We find that there exists an about one-to-one proportionality between money and prices and money and real income, and that exogeneity of money cannot be rejected for the currency in circulation in the economy. But, the exception here comes from the broad monetary aggregate used in the QTM equation such that money seems to be endogenous as for the long-term variable space