Money-Income Causality In Bangladesh: An Error Cor

Bangladesh Development Studies Vol. XXXIV, March 2011, No. 1

Money-Income Causality in Bangladesh: An delusion Correction Approach
MOHAMMAD AMZAD HOSSAIN * The causal descent between coin and income rest a contentious and lively issue in the literature. thus far though the literature on this issue is voluminous, however, for Bangladesh it is quite nascent. A few earlier studies suffer from methodological deficiency as they did not take into consider the time series properties of the variables. The target area of this paper is to look on the causality between capital and income in Bangladesh. The paper differs from the earlier ones regarding data used and econometric techniques applied. The main contribution of the paper is to address the issue of pithy run dynamics of the money income relationship within a long run relationship. The empirical results show that money interpret and income are cointegrated, implying that there is stable long run relationship between them. The estimated error correction model shows that there is biface causality between money and income, implying that monetary polity should be undertaken to realise the basic macroeconomic goals of achieving higher take aim of outturn. I.



INTRODUCTION

The explanatory power of money over aggregate economic use remains a contentious and empirical issue in the literature. The causal nexus between money supply and output has an important implication for the theoretical debate on whether money matters. Besides, the conduct of monetary policy with the aim of macroeconomic stabilization hinges upon, among other things, whether money is causally linked to the ultimate policy goals. However, to achieve higher output, full employment and price level stability based on controlling the growth of money supply crucially depends on two prerequisites: first, development of an sound procedure for controlling the rate of growth of money line of reasoning and second, close identification of the linkages between the...If you want to get a full essay, order it on our website: Ordercustompaper.com



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