The Search for Co-Integratıon Between Money, Prıces and Income: Low Frequency Evıdence From the Turkısh Economy

  • Cem Saatçioğlu Istanbul University, Faculty and Department of Economics, Turkey
  • Levent Korap Marmara University, Turkey

Abstract

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.


Key words: Money, Prices, Income, Quantity theory of money, Co-integration, Longspan data, Turkish economy.
JEL: C32, E51, E52, E61.

How to Cite
Saatçioğlu C., & Korap L. (2009). The Search for Co-Integratıon Between Money, Prıces and Income: Low Frequency Evıdence From the Turkısh Economy. Panoeconomicus, 56(1), 55-72. doi:10.2298/PAN0901055S
Section
Original scientific paper