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Money, Income And Causality: An Open Economy Reexamination, El-Hachemi Aliouche

Doctoral Dissertations

The positive relationship between the rate of growth of the money supply and the rate of growth of aggregate income is a widely accepted principle in macroeconomics. However, the direction of the causality between these two variables has been an enduring subject of controversy.

Recent developments in time series analysis, particularly those relating to the concepts of integration and cointegration, and the stationary nature of economic time series, promise to help settle the debate on the statistical relationship between money supply growth and income growth. Most of the recent work on this issue, however, has been confined to a closed …