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Long Run Money Neutrality: The Case of Guatemala

2005; Universidad Católica Boliviana San Pablo; Linguagem: Inglês

10.35319/lajed.20055255

2309-9038

Frederick Wallace,

Economic Theory and Policy

The Fisher and Seater (1993) methodology is used to test for the long run neutrality of money in Guatemala, 1950-2001. Real GDP, real per capita GDP, and the money measures, M1 and M2, are integrated of order one [1(1)]. Given these orders of integration, the Fisher-Seater neutrality test can be applied. The evidence suggests that M1 and M2 are neutral with respect to real GDP. Furthermore, the test indicates that M1, but not M2, is neutral with respect to real per capita GDP as well.