Money Supply and Inflation Dynamics in the Asia-Pacific Economies: A Time-Frequency Approach
12 Pages Posted: 25 Jul 2017 Last revised: 15 Sep 2017
Date Written: April 5, 2017
We examine the relationship between money supply growth and inflation in 3 Asian Economies which are India, Malaysia and Japan using a time-frequency approach. The application of a unified multi-scale analysis allows us to provide a continuous assessment of the link between money supply growth and inflation, unlike most of the existing literature studying this relationship. We also employ a bivariate frequency-domain causality test to determine the nature and direction of interdependence between money supply growth and inflation dynamics. Our findings provide a better understanding of their lead-lag linkages and causal relationship in the selected countries of the Asia-Pacific region.
Keywords: Monetary Policy, Wavelet Analysis, Nonlinear Causality
JEL Classification: C40, E3, E4, E50
Suggested Citation: Suggested Citation