Long-Run Neutrality, High Inflation, and Bank Insolvencies in Argentina and Brazil

Posted: 7 Dec 2000

See all articles by Sang-Kun Bae

Sang-Kun Bae

Korea Economic Research Institute

Ronald A. Ratti

Western Sydney University - Department of Economics & Finance

Abstract

Using long, low frequency data on money and output over 1884-1996 for Argentina and over 1912-1995 for Brazil, it is found that money is long-run neutral but not long-run superneutral with regard to real output. A rise in money growth is associated with a decline in output - the opposite of the Tobin effect. The introduction of dummy variables for 1930s or to capture recent periods of financial disruption associated with bank insolvencies does not restore long-run superneutrality for either country. However, results indicate that bank insolvency episodes have a distinct and negative influence on output.

Keywords: long-run neutrality, inflation crises, bank insolvencies

JEL Classification: E31; E51

Suggested Citation

Bae, Sang-Kun and Ratti, Ronald A., Long-Run Neutrality, High Inflation, and Bank Insolvencies in Argentina and Brazil. Journal of Monetary Economics, Vol. 46, Issue 3, December 2000. Available at SSRN: https://ssrn.com/abstract=251893

Sang-Kun Bae

Korea Economic Research Institute ( email )

FKI bldg. 28-1
Yoido Yongdungpo
Seoul, 150-756
Korea, Republic of (South Korea)
+82-2-3771-0023 (Phone)
+82-2-785-0273 (Fax)

HOME PAGE: http://blog.naver.com/econ_bae

Ronald A. Ratti (Contact Author)

Western Sydney University - Department of Economics & Finance ( email )

Sydney, NSW 1797
Australia

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